Federal Trade Commission Planning to Sue Major U.S. Health Companies Over Drug Pricing Practices
The Federal Trade Commission (FTC) is gearing up to file lawsuits against three of the largest U.S. health companies over their practices as middlemen who negotiate prices for medications like insulin. The agency alleges that these practices are inflating costs for patients, according to a source familiar with the matter as reported by CNBC.
The three companies in the FTC’s crosshairs are UnitedHealth Group’s Optum Rx, CVS Health’s Caremark, and Cigna’s Express Scripts. These pharmacy benefit managers (PBMs) are being targeted for their business practices related to rebates brokered with drug manufacturers, as per the Wall Street Journal.
FTC Investigation and Lawsuits
The FTC has been investigating PBMs since 2022, with a specific focus on insulin prices. While the upcoming lawsuits are expected to address the role of PBMs in driving up medication costs, it remains unclear whether drug manufacturers like Eli Lilly, Sanofi, and Novo Nordisk will be implicated as well.
FTC Interim Report
On Tuesday, the FTC released an interim report based on its ongoing investigation into PBMs, accusing the largest PBMs of manipulating the drug supply chain to benefit themselves at the expense of smaller pharmacies and American patients. The report highlighted that six major PBMs handle nearly 95% of the prescriptions filled in the U.S.
Biden Administration’s Efforts
The Biden administration and Congress have been increasing pressure on PBMs to improve transparency in their operations, aiming to address the affordability challenges faced by many Americans in accessing prescription drugs. In a bid to tackle rising drug prices, President Biden signed the Inflation Reduction Act, capping insulin prices for Medicare beneficiaries at $35 per month. However, this policy does not currently extend to patients with private insurance.
Extreme Investor Network’s Take
At Extreme Investor Network, we believe that staying informed about developments in the business world is crucial for making sound investment decisions. As the FTC takes legal action against major U.S. health companies, we are closely monitoring the impact these lawsuits could have on the healthcare and pharmaceutical industries. Stay tuned for updates and analysis on this evolving situation to make informed investment choices.