UnitedHealth Group, CVS Health, Cigna inflated drug prices, FTC says

The nation’s three largest pharmacy benefit managers have significantly marked up the prices of certain medicines, including for heart disease, cancer and HIV, at their affiliated pharmacies, the U.S. Federal Trade Commission said on Tuesday.

From 2017 to 2022, the companies — UnitedHealth Group‘s Optum, CVS Health‘s CVS Caremark and Cigna‘s Express Scripts — marked up prices at their pharmacies by hundreds or thousands of percent, netting them $7.3 billion in revenue in excess of the acquisition costs of the drugs, the FTC said in its second report on the industry.

“The $7.3 billion is the difference between what they are reimbursing themselves and what it is estimated to cost them to acquire the drug,” an FTC spokesperson told reporters in a press briefing, adding that the figure was “probably an underestimate.”

Pharmacy benefit managers, or PBMs, act as middlemen between drug companies and consumers. They negotiate volume discounts and fees with drug manufacturers on behalf of employers and health plans, create lists of medications that are covered by insurance, and reimburse pharmacies for prescriptions.

The FTC sued the three PBMs in September, accusing them of steering diabetes patients toward higher priced insulin products in order to reap millions of dollars in rebates from drugmakers.

The companies say the suit is baseless and defend their practices. CVS, UnitedHealth and Cigna in October asked the FTC to disqualify Chair Linda Khan from the insulin suit, citing alleged bias against their pricing model.

“We’re confident that our actions are going to be upheld in the litigation, and we’re not going to be distracted from our duty to inform the public and policy makers by the PBM scare tactics,” the FTC spokesperson said on Tuesday.

Khan’s term as chair officially expired in September. President-elect Donald Trump will be inaugurated Jan. 20 and has picked current Commissioner Andrew Ferguson to succeed Khan, who said during a Tuesday meeting that it would be her last as chair.

The change is unlikely to stall the push against PBMs, which have come under fire from lawmakers on both sides of the aisle looking to lay blame for high prescription drug costs. Trump has blamed them for driving up costs and said he would eliminate their role.

“We’ve received a lot of support from Republican commissioners, including the incoming chair, for our work on PBMs,” the FTC spokesperson said.

Lawmakers came close to passing a provision prohibiting PBMs from deriving payments based on a drug’s Medicare list price and are likely to pass it this year.

A spokesperson for CVS Health said the proposed regulations would raise costs for Americans and “serve as a handout to the pharmaceutical industry.”

Pharmaceutical companies and PBMs regularly point the finger at the other whenever they come under fire for the high cost of prescription drugs in the United States.

“Instead of focusing on the impact to consumers and organizations that pay for prescription drugs, the FTC has prioritized comments from the conflicted pharmaceutical and pharmacy industries that would profit from a weakened PBM guardrail,” said David Whitrap, vice president of external affairs at CVS Health.