FTC Preparing Suit Against Drug Middlemen Over Insulin Rebates

The US Federal Trade Commission is preparing a lawsuit against the three largest drug middlemen over their use of rebates for insulin and other drugs, according to a person familiar with the probe.

The agency has been investigating whether the rebate practices of insulin manufacturers and the three largest pharmacy benefit managers – units of CVS Health Corp., Cigna Group and UnitedHealth Group Inc. – violate federal law, said the person, who asked not to be named discussing an ongoing probe. The insulin market is dominated by three manufacturers: Eli Lilly & Co., Sanofi SA, and Novo Nordisk A/S.

The drug middlemen negotiate with drugmakers and manage prescription plans for employers and health insurers.

The complaint is still being drafted but could be filed as soon as this month, the person said. The agency’s five commissioners would need to vote on the lawsuit before it can be filed.

CVS Caremark said in a statement its members on average pay less than $25 for insulin and blamed drug companies for raising list prices. A representative for Cigna’s Express Scripts unit said members paid less out of pocket for medicines in 2023 than in 2022, even as drugmakers raised prices. UnitedHealth Group declined to comment.

States and municipalities have also filed suits against both pharmacy benefit managers and drugmakers alleging that they drove up insulin costs for public-sector health plans. Many of those cases have been consolidated in a New Jersey federal court managing the litigation.

On Tuesday, the FTC issued an interim staff report on pharmacy benefit managers, finding that they often “steer” patients to their own dispensaries including mail-order and specialty businesses, to “advantage their own pharmacies while excluding rivals.”

The FTC issued a policy statement in June 2022 pledging greater enforcement of a 1936 price discrimination law to target illegal prescription drug rebates.

The Wall Street Journal earlier reported news of the potential lawsuit.