US FTC to sue drug middlemen over insulin prices, source says By Reuters

(Reuters) -The U.S. Federal Trade Commission is planning to sue UnitedHealth (NYSE:), Cigna (NYSE:) and CVS Health (NYSE:) – the three largest pharmacy-benefit managers – over their tactics for negotiating prices for drugs including insulin, the Wall Street Journal reported on Wednesday.

Pharmacy benefit managers, or PBMs, act as middlemen between drug companies and consumers. They negotiate fees and volume-based discounts, known as rebates, with drug manufacturers, create lists of medications that are covered by insurance, and reimburse pharmacies for prescriptions.

The FTC plans to file lawsuits targeting business practices related to rebates brokered with drug manufacturers, the report said, citing a person familiar with the matter.

“Any action that limits the use of these PBM negotiating tools would reward the pharmaceutical industry and return the market to a broken state, leaving American businesses and patients at the mercy of the prices drugmakers set,” a CVS spokesperson said, adding that the company will defend the use of these tools vigorously.

The FTC and UnitedHealth declined to comment, while Cigna did not immediately respond to a Reuters request for comment.

Shares of CVS Health fell 1.2% and Cigna dropped marginally in afternoon trading.

This comes a day after the FTC issued an interim report, saying the three biggest PBMs – managing 79% of U.S. prescription drug claims – have greatly enriched themselves at the expense of smaller pharmacies and consumers.

U.S. President Joe Biden’s signature legislative achievement, the Inflation Reduction Act, has capped insulin prices for government-backed Medicare insurance recipients at $35 per month but the law does not extend to patients with private insurance or without insurance from higher prices.

As of 2023, around 8.4 million people in the United States with diabetes used insulin, according to the American Diabetes Association.