Washington, D.C. — In response to news that the Federal Trade Commission (FTC) has sued the “Big Three” pharmacy benefit managers (PBMs) and their affiliated group purchasing organizations (GPOs) for engaging in an allegedly illegal rebate scheme that inflated insulin list prices—boosting their own profits at the expense of vulnerable patients—the American Economic Liberties Project released the following statement.

“The FTC’s case adds to the mounting, bipartisan criticism of the ‘Big Three’ PBMs, which for far too long have exploited their monopoly power to inflate drug prices and enrich shareholders at the expense of patients’ health and pocketbooks,” said Emma Freer, Senior Policy Analyst for Health Care at the American Economic Liberties Project. “The lawsuit also exposes their industry-wide abuse, using insulin—the price of which has soared over 1,200% since 1999—as a flagship example of how PBMs’ rebate schemes distort markets and drive up costs for life-saving drugs. While PBMs bear much of the blame, the FTC is right to also put brand-name manufacturers like Eli Lilly, Novo Nordisk, and Sanofi on notice for their role in this crisis. We’re thrilled to see the Commission bring this long overdue challenge against healthcare’s most notorious middlemen, and hope to see it result in concrete reform and accountability.”

The FTC’s administrative complaint alleges that CVS Health’s Caremark, Cigna’s Express Scripts, and UnitedHealth Group’s OptumRx—the “Big Three” PBMs, who account for nearly 80% of U.S. prescription drug claims—along with their respective GPOs, engaged in “anticompetitive and unfair rebating practices” that drove up insulin list prices, blocked access to more affordable generic alternatives, and shifted costs to vulnerable patients who need insulin to survive. The FTC is using its enforcement authority under Section 5 of the FTC Act, which prohibits unfair methods of competition and unfair acts or practices, to bring this complaint.

The alleged rebate scheme began in 2012, with the creation of exclusionary drug formularies. Consolidated PBMs leveraged their powering during price negotiations with drug manufacturers, demanding ever-increasing rebates in exchange for preferred formulary placement and excluding competing products, such as cheaper generic equivalents. According to FTC’s statement, one Novo Nordisk executive said that PBMs were “addicted to rebates.”

As a result of these rebating practices, insulin list prices soared. For example, Novolog U-100, an insulin manufactured by Novo Nordisk, more than doubled in price, from $122.59 in 2012 to $289.36 in 2018. PBMs collected these rebates instead of passing them along the patients, as they promised they would. Consequently, vulnerable patients owed more for life-saving medications.

Additional Background

PBMs’ market dominance and outsized power also hurt smaller and independent pharmacies across the country, as a recent FTC 6(b) interim report revealed. By imposing unfair, opaque contract terms and steering patients towards their own affiliated pharmacies, PBMs make it difficult for these unaffiliated pharmacies to stay in business and serve their communities. According to recent data from independent pharmacist Benjamin Jolley, over 1,100 independent and small to mid-sized pharmacies have closed since January 1, 2024.

Read “Why We Should Ban PBM Rebates” to learn more.

Read “The Pharmacy Benefit Mafia” to learn more.

Learn more about Economic Liberties here.

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The American Economic Liberties Project works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.