In this article, CVS Health, UnitedHealth Group, and Cigna are requesting Federal Trade Commission Chair Lina Khan and two other commissioners to recuse themselves from a lawsuit alleging that the companies and other drug middlemen have been increasing their profits while inflating insulin costs for Americans. The companies filed separate motions on Tuesday night with the FTC, arguing that all three commissioners have a history of making public statements showing bias against the companies’ pharmacy benefit managers.
The companies accused Khan, Commissioners Alvaro Bedoya, and Rebecca Kelly Slaughter of incorrectly labeling PBMs as “price gougers” with significant control over drug pricing and access to medications like insulin. CVS stated that these statements indicate the commissioners have already formed opinions on the matter, violating due process.
UnitedHealth’s motion highlighted that any judge making similar remarks about a litigant would be required to recuse due to bias. Cigna also claimed that Khan had prejudged the facts and law related to the case by asserting that PBMs control drug pricing and patient access to medications.
The FTC initiated the complaint through its administrative process, which involves a proceeding before an administrative judge who would hear the case and issue an opinion, followed by a vote by FTC commissioners. The FTC declined to comment on the motion when approached by CNBC.
The lawsuit filed by the FTC targets the three largest PBMs – CVS Health’s Caremark, UnitedHealth Group’s Optum Rx, and Cigna’s Express Scripts, which collectively manage about 80% of the nation’s prescriptions. PBMs play a crucial role in the U.S. drug supply chain by negotiating rebates with manufacturers, creating lists of preferred medications, and reimbursing pharmacies for prescriptions.
The lawsuit alleges that the PBMs have established a system prioritizing high rebates from manufacturers, leading to inflated insulin prices. It also claims that PBMs favor high-list-price insulins even when lower-priced alternatives are available. The lawsuit includes each PBM’s affiliated group purchasing organization, which facilitates drug purchases for healthcare providers.
CVS is facing various challenges, with its shares down over 20% this year due to rising medical costs and pharmacy reimbursement pressures. The company is considering a strategic review that may involve separating its insurer from its retail pharmacies. CVS accused Khan of consistently criticizing PBMs throughout her career and cited previous statements by Slaughter and Bedoya regarding PBM practices.
The Biden administration and lawmakers are increasing pressure on PBMs to enhance transparency in their operations as many patients struggle to afford prescription drugs. Americans pay significantly more for prescription drugs compared to patients in other developed nations, according to a fact sheet from the White House.
