The Federal Trade Commission’s lawsuit against pharmacy benefits managers CVS, Cigna, and UnitedHealth is attracting attention for its atypical claims and procedural choices. The FTC alleges that these PBMs engaged in rebate practices that resulted in higher insulin prices, prompting significant scrutiny from legal and corporate sectors.
Pharmacy benefits managers (PBMs) typically manage prescription drug benefits for payers such as health insurers, employers, or labor unions, ensuring the payment process for pharmacies on behalf of insured patients. In this case, however, the FTC claims that PBMs excluded insulins with lower list prices in favor of those with higher rebates and list prices, allegedly causing certain patients to incur higher out-of-pocket costs for insulin. The administrative complaint levied by the FTC asserts violations under both “unfair methods of competition” and “unfair acts and practices” as set out in Section 5 of the FTC Act, a combination rarely seen in such cases.
The complaint’s structure is unusual because it merges claims typically addressed separately, raising questions about how the FTC plans to substantiate these allegations, especially if reviewed by a federal court of appeals. This dual-pronged approach has so far not been tested rigorously in court, making the complaint a pivotal case worth monitoring for professionals in the legal and healthcare fields. An FTC staff press release underlined the broader implications the agency hopes this case will have beyond the insulin market.
Another peculiar aspect is the FTC’s choice not to sue drug manufacturers involved in the alleged misconduct, despite acknowledging “serious concerns” about their behavior. This decision adds layers of complexity to the case, potentially impeding the FTC’s ability to foster cooperative third-party relationships crucial for enforcement actions.
Additionally, the focus on list prices by the FTC raises further questions about the actual consumer impact given the intricacies of the pharmaceutical supply chain. For example, the nuanced issue of how much rebate savings get passed onto payers—and ultimately, consumers—remains a contentious topic. Data from the Texas Department of Insurance suggests only a minuscule fraction of rebates directly benefit patients, complicating the narrative around consumer harm.
The FTC’s maneuver to utilize its in-house administrative court instead of federal courts, unlike its Justice Department counterpart, introduces risks of constitutional challenges. The PBMs, already on the defensive, have initiated a defamation suit against the FTC, signaling the contentious road ahead. Professionals tracking this lawsuit will need to assess potential constitutional challenges related to the administrative court system and the FTC’s structure, potentially setting significant precedents for future antitrust and consumer protection litigation.