The Federal Trade Commission (FTC) has filed a lawsuit against the three largest pharmacy benefit managers (PBMs) in the U.S., claiming they have directed diabetes patients towards more expensive insulin options to profit from substantial rebates paid by pharmaceutical firms.

The lawsuit targets UnitedHealth Group’s Optum, CVS Health’s CVS Caremark, and Cigna’s Express Scripts for their practices that allegedly exclude cheaper insulin medications from insurance coverage lists.

Reducing prescription drug prices has been a crucial aim for the Biden administration, with Vice President Kamala Harris highlighting her commitment to assist patients, especially in making insulin more affordable, during her campaign.

The FTC noted that patients with coinsurance and deductibles, who did not qualify for the discounted prices, have been adversely affected by these actions. The three firms manage about 80% of all U.S. prescriptions, according to the information filed in the FTC’s internal court.

In response, CVS spokesperson David Whitrap emphasized in a statement that the company has been dedicated to making insulin more affordable for Americans and labeled the FTC’s actions as “incorrect.” He reaffirmed CVS’s commitment to protect American patients, unions, and businesses from surging prescription drug prices.

Cigna’s Chief Legal Officer Andrea Nelson criticized the FTC, suggesting it was trying to gain political leverage. She cautioned that if the FTC succeeds in requiring PBMs to include medications with higher overall costs, it could ultimately lead to increased drug prices nationwide.

Optum Rx spokesperson Elizabeth Hoff dismissed the lawsuit as unfounded, claiming that the company has managed to reduce insulin costs for its health plan clients to an average of under $18 per month through negotiations and additional initiatives.

CVS shares decreased by 1.6% in midday trading, while UnitedHealth and Cigna’s stocks saw slight declines.

The lawsuit also targets Zinc Health Services, Ascent Health Services, and Emisar Pharma Services, which are purchasing organizations established by these companies in recent years.

‘Guardians of Medication’

Rahul Rao, Deputy Director at the FTC’s Bureau of Competition, remarked that these three PBMs are acting as “guardians of medication,” exploiting millions from patients who rely on critically important drugs.

“Millions of diabetics depend on insulin for their survival, yet for many struggling patients, the costs for insulin have surged over the last decade, partly due to the insatiable greed of powerful PBMs,” he said.

While the FTC’s lawsuit excluded major insulin manufacturers—Eli Lilly, Sanofi, and Novo Nordisk—it did point fingers at their involvement in a flawed system, indicating the possibility of future legal action against these pharmaceutical companies.

Shares of the drug manufacturers remained stable amid the news on Friday afternoon.

CVS Caremark asserted that any efforts to limit the negotiating abilities of PBMs would inadvertently favor pharmaceutical companies.

The three PBMs have pushed back against the FTC’s stance, arguing it shows a lack of impartiality. Express Scripts recently filed a lawsuit against the FTC to compel it to retract a report asserting that PBMs profit at the expense of smaller pharmacies.

The matter will be adjudicated by one of the FTC’s three designated administrative law judges, who are appointed by the agency’s five-member commission.

An FTC official noted that cases within the agency’s internal court generally progress quickly, facilitating significant evidence exchanges among the involved parties.

(Reporting by Jody Godoy in New York and Ahmed Aboulenein in Washington; Edited by Aurora Ellis)