America's FTC Sues Insulin Middlemen Who 'Artificially Inflated' Drug Price (npr.org) 21
Friday America's Federal Trade Commission brought action against three companies for "anticompetitive and unfair" practices "that have artificially inflated the list price of insulin."
For years, many of the millions of Americans who need insulin to survive "have been forced to pay exorbitant prices for a product that's inexpensive to make," writes NPR. "Now, the federal government is targeting one part of the system behind high insulin prices." While out-of-pocket costs have gone down for many people to $35 a month, questions remain on how the drug became so expensive in the first place. In a new lawsuit filed Friday, the Federal Trade Commission said it's going after one link in the chain: pharmacy benefit managers. The FTC brought action against the top pharmacy benefit managers (PBMs) — CVS Health's Caremark Rx, Cigna's Express Scripts, and United Health Group's OptumRx — saying the companies created a "perverse drug rebate system" that artificially inflates the cost of insulin. If the suit is successful, it could further drive down costs for patients at the pharmacy counter.
PBMs are essentially the middlemen between drug manufacturers and insurance providers. Their job is to reduce drug prices. But the process is complex and opaque, and critics say they're actually driving prices up for patients. The FTC said a big issue is that PBMs' revenue is tied to rebates and fees — which are based on a percentage of a drug's list price. Essentially, in the case of insulin, when the drug costed more, it generated higher rebates and fees for PBMs. "Even when lower list price insulins became available that could have been more affordable for vulnerable patients, the PBMs systemically excluded them in favor of high list price, highly rebated insulin products," the FTC said in a press release on Friday.
The three PBMs named in the FTC lawsuit make up about 80% of the market. According to the suit, the PBMs collected billions of dollars in rebates and fees while insulin became increasingly unaffordable. Over the last two decades, the cost of the lifesaving drug shot up 600% — forcing many Americans with diabetes to ration their medication and jeopardize their health. In 2019, one 1 of 4 insulin patients was unable to afford their medication, according to the FTC. Some people have died.
The FTC's statement says the companies "have abused their economic power by rigging pharmaceutical supply chain competition in their favor, forcing patients to pay more for life-saving medication... While PBM respondents collected billions in rebates and associated fees according to the complaint, by 2019 one out of every four insulin patients was unable to afford their medication..."
"[A]ll drug manufacturers should be on notice that their participation in the type of conduct challenged here raises serious concerns, and that the Bureau of Competition may recommend suing drug manufacturers in any future enforcement actions."
For years, many of the millions of Americans who need insulin to survive "have been forced to pay exorbitant prices for a product that's inexpensive to make," writes NPR. "Now, the federal government is targeting one part of the system behind high insulin prices." While out-of-pocket costs have gone down for many people to $35 a month, questions remain on how the drug became so expensive in the first place. In a new lawsuit filed Friday, the Federal Trade Commission said it's going after one link in the chain: pharmacy benefit managers. The FTC brought action against the top pharmacy benefit managers (PBMs) — CVS Health's Caremark Rx, Cigna's Express Scripts, and United Health Group's OptumRx — saying the companies created a "perverse drug rebate system" that artificially inflates the cost of insulin. If the suit is successful, it could further drive down costs for patients at the pharmacy counter.
PBMs are essentially the middlemen between drug manufacturers and insurance providers. Their job is to reduce drug prices. But the process is complex and opaque, and critics say they're actually driving prices up for patients. The FTC said a big issue is that PBMs' revenue is tied to rebates and fees — which are based on a percentage of a drug's list price. Essentially, in the case of insulin, when the drug costed more, it generated higher rebates and fees for PBMs. "Even when lower list price insulins became available that could have been more affordable for vulnerable patients, the PBMs systemically excluded them in favor of high list price, highly rebated insulin products," the FTC said in a press release on Friday.
The three PBMs named in the FTC lawsuit make up about 80% of the market. According to the suit, the PBMs collected billions of dollars in rebates and fees while insulin became increasingly unaffordable. Over the last two decades, the cost of the lifesaving drug shot up 600% — forcing many Americans with diabetes to ration their medication and jeopardize their health. In 2019, one 1 of 4 insulin patients was unable to afford their medication, according to the FTC. Some people have died.
The FTC's statement says the companies "have abused their economic power by rigging pharmaceutical supply chain competition in their favor, forcing patients to pay more for life-saving medication... While PBM respondents collected billions in rebates and associated fees according to the complaint, by 2019 one out of every four insulin patients was unable to afford their medication..."
"[A]ll drug manufacturers should be on notice that their participation in the type of conduct challenged here raises serious concerns, and that the Bureau of Competition may recommend suing drug manufacturers in any future enforcement actions."
For reference (Score:3, Informative)
On how bad US citizens are getting ripped off.
https://www.visualcapitalist.c... [visualcapitalist.com]
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Rather, it is a result of the incestuous relationship between pols and these guys. Payola in return for contributions. But I agree it is not inherently a capialist issue, would get the same with socialism and communism, for instance.
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In pure, socialism we've seen what happens .. the government will produce insulin of low and cheap quality and their own regulatory agency will certify it as safe. As it won't really benefit politicians to spend money for long term, there will be no money spent on research to develop artificial pancreas or elimination of insulin dependency. Socialism is capitalism wherein one entity controls both the regulation and the production, and often the media too .. so you wouldn't even know that people are getting
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Except there already are companies that manufacture insulin and epi-pens at low cost and passed clinical trials in several countries decades ago. Some even have a major presence in US
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Speaking of tax, in civilised countries tax is used to provide medicine for chronic illnesses at zero cost to the unfortunate user. Some of these medicines cost a hell of a lot more than insulin to manufacture.
About time (Score:2)
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This has been a hidden, complex arrangement that is so opaque and difficult to unravel, that these PBMs have been able to rip off consumers for decades. Before anyone objects, this is not capitalism.
I don't know how this came about, but wouldn't be surprised if it was someone telling an insurance company they could save money by outsourcing work (to them of course) to coordinate dealing with the various pharmaceutical companies instead of having employees for that ...
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The people the insurance companies outsourced the negotiations with the drug companies with started out helpful. After corporate mergers and Venture Capital buyouts, there were only three firms left. And they realized they could use their positions as middlemen to make a lot of money.
For example, Advair Diskus is a "name brand" asthma inhaler. Available through my insurance company at $400 per month, because of PBM markups. GoodRx does a better job negotiating (which tells you something about the PBM ro
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You'd have to explain which tenets in capitalism strictly forbid this, especially given several cheerleading capitalism uber alles actively indirectly advocate for several aspects of this (lack of regulation, let the market decide, etc.).
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You'd have to explain which tenets in capitalism strictly forbid this, especially given several cheerleading capitalism uber alles actively indirectly advocate for several aspects of this (lack of regulation, let the market decide, etc.).
Use of the coercive power of government to create artificial barriers of entry to the market.
One of the feedback mechanisms in capitalism is that high profits entice other firms to enter the market for the high-profit good or service (or a similar good or service that's a reasonable substitute), increasing supply and reducing prices
Next question, please.
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In order for there to be a free market, there must be price transparency, freedom to enter and exit the market, and equal information. The pharmaceutical market scores 0 out of 3.
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To me believing in capitalism is just as much as knowing where it doesn't work and healthcare is one of those areas. It's just too inelastic and I think there is an obvious moral hazard in keeping it behind access to wealth effectively. You can still be a card-carrying capitalist and hold that opinion, we do it for lots of things already.
When you have something with effectively infinite demand (how much would you pay not to die) a market can't rally operate, or you end up with so much regulation just to p
Re: About time (Score:2)
You appear not to know who the PBM's consumers are: the corporations whose employee pharmacy benefits they manage. Those corporations haven't been ripped off at all.
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This actually is capitalism. It is not a free market though, but the usual greedy capitalists do not want a free market.
Incoherent (Score:2)
Something fishy with Paxlovid pricing too (Score:2)
Last week I came down with whatever strain of Covid is going around and got an RX for Paxlovid. That's gone up in price to something like $1,700. Weird thing is, almost nobody actually has to pay that price, since it's either covered by insurance or there's presently a patient assistance program if you're uninsured.
Still, it reminds me of that Star Trek Voyager episode [fandom.com], where The Doctor is kidnapped and forced to work on an alien planet that essentially had a carbon-copy of the US healthcare system.
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Yeah, it's so they can utterly overcharge the government, like with medicare.
I remember when the mandate came down to have a epipen in with the AED (Automatic External Defibrillator). It's also about the time that epipens started being ridiculously priced.
All the above comments are right on! (Score:2)
I gotta say, that as I write this with maybe 8 comments so far, I like the discussion. We've got too many complexities that are neither red or blue, Marx nor Adam Smith, or any shade between. We can be aware of green or gold or whatever the color of money, which hides behind many veils, domestic and foreign . The above approach is way more constructive, because we can all follow the money, no matter where it goes. Scrutiny is needed to correct the failure of election cycles in government to focus on metr