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FTC Sues Big Pharma Middlemen for Inflating Insulin Prices
"Caremark, ESI, and Optum—as medication gatekeepers—have extracted millions of dollars off the backs of patients who need lifesaving medications," said one agency leader.
Sep 20, 2024
The Federal Trade Commission on Friday initiated a legal process against middlemen that collectively administer about 80% of all prescriptions in the United States, accusing them of artificially inflating the list price of insulin drugs and blocking patients from accessing cheaper products.
The FTC action targets the "Big Three" pharmacy benefit managers (PBMs): CVS Health's Caremark Rx, Cigna's Express Scripts (ESI), and UnitedHealth Group's OptumRx. It also involves their affiliated group purchasing organizations (GPOs): Zinc Health Services, Ascent Health Services, and Emisar Pharma Services.
"Millions of Americans with diabetes need insulin to survive, yet for many of these vulnerable patients, their insulin drug costs have skyrocketed over the past decade thanks in part to powerful PBMs and their greed," said Rahul Rao, deputy director of the FTC's Bureau of Competition.
"Caremark, ESI, and Optum—as medication gatekeepers—have extracted millions of dollars off the backs of patients who need lifesaving medications," Rao continued. "The FTC's administrative action seeks to put an end to the Big Three PBMs' exploitative conduct and marks an important step in fixing a broken system—a fix that could ripple beyond the insulin market and restore healthy competition to drive down drug prices for consumers."
The FTC's vote to begin the legal process by filing a complaint was 3-0. Led by Chair Lina Khan, the Democrats supported the move while the two Republicans, Commissioners Melissa Holyoak and Andrew N. Ferguson, recused.
The American Prospect executive editor David Dayen noted that "the complaint, which was filed in an administrative court, has not yet been made public, as it is undergoing redactions. Agency officials expect it to be made public on Monday."
However, in a statement after the vote, the FTC shared some details about the complaint's arguments that "Caremark, ESI, and Optum and their respective GPOs engaged in unfair methods of competition and unfair acts or practices under Section 5 of the FTC Act by incentivizing manufacturers to inflate insulin list prices, restricting patients' access to more affordable insulins on drug formularies, and shifting the cost of high list price insulins to vulnerable patient populations."
Rao emphasized that while the commission on Friday "exercised its discretion to move forward with suing only the PBMs and GPOs now, FTC staff's investigation has also shed light on the concerning and active role that the insulin manufacturers—Eli Lilly, Sanofi, and Novo Nordisk—play in the challenged conduct."
"All drug manufacturers should be on notice that their participation in the type of conduct challenged here can raise serious concerns, with a potential for significant consumer harm, and that the Bureau of Competition reserves the right to recommend naming drug manufacturers as defendants in any future enforcement actions over similar conduct," he said.
Emma Freer, senior policy analyst for healthcare at the American Economic Liberties Project, pointed out that "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."
"The lawsuit also exposes their industrywide 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 lifesaving drugs," Freer said. "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."
As The New York Timesreported:
Just weeks before the presidential election, the agency is tackling an issue that Vice President Kamala Harris has signaled an interest in. Campaigning at a community college in Raleigh, North Carolina, in August, Ms. Harris promised to "demand transparency from the middlemen who operate between Big Pharma and the insurance companies, who use opaque practices to raise your drug prices and profit off your need for medicine."
Former President Donald J. Trump has not campaigned on the issue, but in 2018, his administration proposed a sweeping change that would have threatened the benefit managers' business model. The proposal was never enacted. Mr. Trump's administration also created a model for capping Medicare patients' out-of-pocket costs for some insulin products that was later expanded under President [Joe] Biden.
The Times also noted that "some Republicans in Congress have proposed curbing some of the benefit managers' business practices. But other top Republicans have defended PBMs and said the FTC is overreaching."
Among the GOP's critics of PBMs is House Committee on Oversight and Accountability Chairman James Comer (R-Ky.), who highlighted his panel's investigations into the companies and praised the FTC move.
Another leading congressional critic of PBMs—and the country's failing for-profit healthcare system more broadly—is Senate Committee on Health, Education, Labor, and Pensions (HELP) Chair Bernie Sanders (I-Vt.), who caucuses with Democrats.
After a public pressure campaign led Eli Lilly, Novo Nordisk, and Sanofi to cut list prices of insulin products last year, Sanders held a hearing with their CEOs as well as PBM executives. At the time, he welcomed the voluntary reductions but also stressed that as "Americans pay outrageously high prices for prescription drugs, the pharmaceutical industry and the PBMs make enormous profits."
While the FTC's Friday action was widely praised—other than by the PBMs, who denied the allegations—some advocates hope the commission and other decision-makers will go even further in the future.
Stacy Mitchell, co-executive director of the Institute for Local Self-Reliance, called PBMs "some of the most predatory corporations in healthcare" and highlighted that "these companies have incredibly long rap sheets and convictions at the state level."
"I'm thrilled the FTC is going after these criminal enterprises," she said. "I hope this lawsuit, with its focus on kickbacks, is just the beginning. We also need action on how PBMs harm local pharmacies. Ultimately, these corporations need to be broken up."
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Sick and Tired of Industry Greed, Activists Across US Target For-Profit Health Insurers
"I'm tired of insurance companies putting profit over people," said one activist at a Chicago rally.
Oct 12, 2023
Pushing back against insurers' annual denial of nearly a quarter-billion healthcare claims or pre-authorization requests, activists rallied in more than a dozen U.S. cities on Wednesday to demand "an end to private health insurance industry greed so people can get the care they need when they need it."
The Care Over Cost Campaign—a national grassroots initiative launched by the advocacy group People's Action—held rallies in cities including Baltimore, Maryland; Chicago, Illinois; Denver, Colorado; Detroit Michigan; Portland, Maine; and Hartford, Connecticut, known as the "insurance capital of the world." The campaign called on the industry lobby group America's Health Insurance Plans (AHIP) to "direct its members to put people over profit."
Activists implored AHIP and private health insurance corporations including Blue Cross Blue Shield (BCBS), UnitedHealthcare, Cigna, Humana, and Aetna "focus on ending the epidemic of care denials."
"CEOs at private health insurance companies profit off our pain and deny our healthcare. That's why people are rising up across the country to expose the lie that private health insurers are there for us when we need them," People's Action Healthcare for All campaign director Aija Nemer-Aanerud said in a statement.
"We all deserve the care we need when we need it, and it's time for greedy corporations like BCBS, Aetna, Cigna, and UnitedHealthcare to pay up and stop denying care," Nemer-Aanerud added.
According to Care Over Cost, private insurers deny more than 248 million claims and pre-authorization requests each year.
The campaign's demands include "sharing claims denial data, holding public meetings, ceasing lobbying, and working with policymakers and public authorities to transform the system to people over profit."
In Chicago, activists from groups including the People's Lobby, ONE Northside, and Jane Addams Senior Caucus held a "die-in" demonstration outside the downtown office of BlueCross BlueShield in support of what the organizers said are "the 700,000 Americans whose lives are impacted or lost due to lack of access to medical care from denied medical claims each day."
Activist Michael Grice, who lives with a disability, told rally attendees that "it took me over four years to get the wheelchair I'm sitting in now."
"I'm tired of insurance companies putting profit over people," Grice said. "They always do it for people with disabilities and senior citizens. I'm fed up with this garbage."
Illinois state Sen. Mike Simmons (D-7) addressed the Chicago rally, asserting that "it's not too much to ask in a developed democracy that people live long, healthy, prosperous lives."
"Those 700,00 denied claims—that's someone who needs insulin, someone who has an untreated liver condition," Simmons said. "That's somebody's aunt, somebody's mom."
Hartford rally attendee Kristen Whitney Daniels toldCT Insider: "This is an untenable situation. And it's only getting worse and worse every year, getting less and less covered."
"The frustrations are gonna boil over eventually," she added. "And [insurers] can either be part of the solution and working with patients to find ways to help patients have health, or they can be a part of the problem."
Responding to the protests, Alex Kepnes, executive director of communications for Aetna, toldCT Insider that the company wants to be "part of the solution."
"We believe that every American should have access to affordable, high-quality health coverage," Kepnes said. "The basic premise of making healthcare more affordable and simpler is at the core of CVS Health's transformation."
CVH Health, which owns Aetna, reported revenue of over $300 billion last year, with profits topping $4 billion—even as the company plans to lay off 500 Connecticut employees.
Daniels, who has Type 1 diabetes and other healthcare needs, said her insurance company, UnitedHealth, is part of the problem, making it extremely difficult to get the insulin she needs. She also said the company stopped covering one medication she needs a year after it was approved for coverage.
"I am tired of insurance companies getting rich off treating patients and disabled folks, like myself, as if we are expendable."
"The problem is this medication has worked so well for the last two years," Daniels said. "So I know how well it works. And then I want it and then I've been off of it for the last few months. And it's been horrible. It's like relearning to be diabetic again."
"I am tired of insurance companies getting rich off treating patients and disabled folks, like myself, as if we are expendable. I am not alone," she added. "That's why I am fighting and I will keep on fighting these claims and for affordable insurance that everyone has access to."
Phil Brewer, an emergency physician representing the single-payer healthcare advocacy group Physicians for a National Health Program (PNHP) at the Hartford rally, told CT Insider that "requiring pre-authorization used to be rare."
"Now it's routine," he added. "It also used to be that a human being actually reviewed the request, but now most requests are 'reviewed' by algorithm-driven AI programs."
At the Portland rally, Ronan Aubrey—whose family has a history of cancer—said they were surprised to receive a bill for a diagnostic ultrasound they thought would be covered by their insurance.
"Because my procedure was recommended by a doctor, I had assumed it would be fully covered. I was wrong," Aubrey told the Maine Beacon. "My insurer only covered a small part of the scan and procedure because I hadn't yet met my $3,500 deductible for the year."
"When an insurer tells us that medical care we need isn't covered, what are we going to do?" Aubrey asked. "My insurer shouldn't be deciding whether I should be getting a medical procedure—my doctor should."
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We the People Can Stop the Surging Corporate Crime Wave
"Citizens mobilized against corporate abuses in the 1960s and 70s. It can happen again now."
Jun 25, 2023
Most heads of giant corporations are drunk with their own power. These corporate CEOs push the envelope in ways that harm defenseless people. They believe they can get away with anything, and they do, with few exceptions. The few corporate crime prosecutions keep declining from Obama to Trump to Biden, due to a settlement-obsessed Department of Justice staffed by lawyers readying to join the lucrative major corporate crime defense firms.
Corporate law firms, which deserve far more scrutiny by the media, have over the decades built a wall of immunity and impunity around these giant firms and their self-enriching CEOs. These CEOs now make an average of $14,000 an hour, while employing workers who are lucky to make $20 an hour. Greedy CEOs have surpassed the lords of medieval feudalism in the disparity they impose on workers.
Corporate law firms find Congressional lawmakers receptive to their campaign contributions and services in drafting legislative loopholes. These law firms place business executives and their own law partners in high executive branch positions (See, Servants of the Damned: Giant Law Firms, Donald Trump, and the Corruption of Justice by David Enrich, 2022).
Corporate law firms specialize in creating an edifice of secretive, anonymous corporate registries that attract a majority of big U.S. corporations to charter in Delaware. Companies register hundreds of shell companies (LLCs) for evasive purposes. Delaware law firms write the corporate law of Delaware for the rubber stamp state legislature. Ironically, these corporate capitalists disempower their own shareholders. Wall Street firms, credit card companies and tax escapees love Delaware. (See, What’s the Matter with Delaware?: How the First State Has Favored the Rich, Powerful, and Criminal – and How It Costs Us All by Hal Weitzman, 2022).
New outrages that swell the corporate crime wave are disclosed daily. Most exposés go nowhere, due to a lazy Congress (about ready again to take off most of the summer until after Labor Day) and to patsy regulators and meager, inadequate enforcement budgets funded by the corporate Congress.
One regular, no longer so patsy, is the tiny Federal Trade Commission (FTC) with an annual budget of $430 million. FTC Chair Lina Khan has just sued giant Amazon (annual sales of $524.89 billion) in the words of New York Times reporter, David McCabe “for illegally inducing consumers to sign up for its Prime services and then hindering them from canceling the subscription…”
The FTC charged that “Amazon tricked and trapped people into recurring subscriptions without their consent’ ‘… duped millions of consumers … [and with] manipulative, coercive or deceptive’ design tactics on its website.” Amazon’s lawyers, of course, deny everything.
On other matters, corporate lawyers are going berserk flexing their obstructive muscles. They sued the state of California for passing a law mildly protecting children from social media-produced harm. Susan Linn in her new book, “Who’s Raising the Kids? Big Tech, Big Business, and the Lives of Children” documents the abuses perpetrated by high predators.
Not to be outdone by their peers, corporate lawyers for the drug industry just filed a frivolous lawsuit against the U.S. Government that was finally authorized by Congress to allow ripped-off Medicare officials to negotiate drug prices with the overcharging Big Pharma. (The VA and the Pentagon already have the power to negotiate with the drug companies.) Presumably, having U.S. taxpayers continue to pay by far the highest drug prices in the world through Medicare—charged by subsidy-coddled U.S. drug companies—suits the “pay or die” Big Pharma CEOs.
Moreover, U.S. drug companies are happy to offshore to China the production of antibiotics. Our country produces virtually no antibiotics – a national security peril I wrote about to President Biden and Secretary of Defense Lloyd Austin, that received no response to date. (See: Letter to President Joe Biden – June 2, 2023).
ProPublica has exposed the giant Cigna health insurance company for rejecting millions of patients’ claims through its hired doctors who instantly deny coverage “on medical grounds” without opening the patient file.” (See, https://www.propublica.org/article/cigna-pxdx-medical-health-insurance-rejection-claims). This report, based on corporate documents and interviews with former Cigna physicians, has not led to any prosecutions either by state or federal officials. This is an egregious example of CEOs pushing the envelope and getting away with it.
A New York Times investigation by Sarah Kliff et al. revealed that a wealthy nonprofit hospital network – Allina Health – in the Midwest has been denying regular health care for patients who have unpaid medical bills. They have cut off patients, “including children and those with chronic illnesses like diabetics and depression.” Canadians, with their universal Medicare system, are stunned when they learn that many hospitals in the U.S. aggressively sue indebted patients, garnish their wages and seize their tax refunds. This is worse than debtors’ prisons where those incarcerated might receive health care.
Anyone who thinks corporate crimes are committed by just a few bad apples in the barrel can read my book Getting Steamed to Overcome Corporatism: Build It Together to Win (2011). Getting Steamed is an enraging compilation of documented corporate crime and criminogenic behavior – resulting in the loss of life, injuries and money from consumers and workers. One of the best public corporate crime databases is Violation Tracker, a project of Good Jobs First. Violation Tracker has over half a million entries that include civil and criminal actions against corporate wrongdoing. (See, https://violationtracker.goodjobsfirst.org/). In addition, visit the Corporate Crime Reporter website https://www.corporatecrimereporter.com/ to see highlights of crime in the suites each week.
Earlier this month, the Justice Department, which after decades of declining to have a comprehensive public corporate crime database, finally launched a modest database. (See: https://www.justice.gov/corporate-crime/corporate-crime-case-database).
Why don’t the American people rise up and tell their legislators and law enforcers that they will no longer accept the terrible corporate harm inflicted on them daily? This harm includes dangerous products (Opioids), detrimental services (medical negligence leading to 5000 deaths per week, according to a John Hopkins School of Medicine peer-reviewed report), toxic pollution, workplace casualties, endless cheating of consumers ($350 billion in health industry billing fraud a year) and other intolerable abuses. (See Malcolm Sparrow’s website: https://scholar.harvard.edu/msparrow).
Most corporate crooks are above the law. They think that collectively “We the People” are a nation of sheep – unable and unwilling to take their demands, often supported by large majorities, to Congress and get some strong law and order legislation enacted. Polls show huge majorities (left/right) want jail time and restitution from wealthy corporate outlaws.
Public Citizen, which lobbies against corporate crime, wants to hear from you (visit, https://www.citizen.org/). PC’s president Robert Weissman, together with former PC president Joan Claybrook, have a new book coming out next month. It’s called “The Corporate Sabotage of America’s Future: And What We Can Do About It.” Read it and generate a rumble all the way to your congressional senators and representatives who are about to head home as Congress goes into recess for most of the summer.
Citizens mobilized against corporate abuses in the 1960s and 70s. It can happen again now when the corporate overlords in the context of demonstrated crises – climate, pandemics and powerful unregulated technologies – are acting far worse than they have in recent times.
The awakened power of dedicated, informed people cannot be overcome.
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