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"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.
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 Times reported:
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."
"This for-profit system leads to higher rates of death and disease and lower life expectancies—all while Americans spend more and more trying to get the care they need."
Congresswoman Pramila Jayapal on Thursday night responded to a new analysis exposing the failures of the for-profit U.S. healthcare system by renewing her call for Medicare for All.
Jayapal (D-Wash.) and Sen. Bernie Sanders (I-Vt.) are the lead sponsors of the Medicare for All Act. When they reintroduced the bill last year, they highlighted research showing that it could save 68,000 lives and $650 billion per year.
The Commonwealth Fund report—titled Mirror, Mirror 2024: A Portrait of the Failing U.S. Health System and released Thursday—adds to the mountain of evidence that, as Jayapal said in a series of social media posts, "our healthcare is broken."
Noting that "41% of Americans hold medical debt" and "millions are uninsured," the Congressional Progressive Caucus chair declared that "we need universal, single-payer healthcare: Medicare for All."
"America's healthcare system is in dire need of an overhaul. It is largely run by private insurance companies who only care about increasing their profits and limiting choices for consumers."
As Common Dreams reported, the latest Commonwealth Fund analysis focuses on 70 health system performance measures in Australia, Canada, France, Germany, the Netherlands, New Zealand, Sweden, Switzerland, the United Kingdom, and the United States.
"All the countries have strengths and weaknesses, ranking high on some dimensions and lower on others," the report states. "Nevertheless, in the aggregate, the nine nations we examined are more alike than different with respect to their higher and lower performance in various domains. But there is one glaring exception—the U.S."
Jayapal made her case for Medicare for All with some details from the report, pointing out that "despite spending more, the U.S. ranked last in equity, access to care, and health outcomes—including acute illnesses, chronic diseases, and death. Of the countries studied, Americans live the shortest lives and face the most avoidable deaths."
"This is wholly unacceptable," she argued. "America's healthcare system is in dire need of an overhaul. It is largely run by private insurance companies who only care about increasing their profits and limiting choices for consumers."
"They refuse to pay for certain doctors, even as the average American spends tens of thousands of dollars every year on copays, deductibles, and private insurance premiums," she said. "Sometimes, they even have their own doctors override decisions about what you need for your own healthcare."
The congresswoman continued:
Medical debt and exorbitant costs regularly keep people from seeking necessary care, with a growing population of "underinsured" Americans—those who have health insurance but still aren't getting the care they desperately need.
This for-profit system leads to higher rates of death and disease and lower life expectancies—all while Americans spend more and more trying to get the care they need. In the richest nation on the planet, this simply should not and cannot be the case.
We need a system with comprehensive care for all, regardless of employment status, with no copays, deductibles, or private insurance premiums. A system where the [government] provides your insurance and doesn't allow private companies to override what your own doctor says you need.
We need comprehensive and improved Medicare for All that covers mental health, long-term care, reproductive care, dental, vision, and hearing. No hidden fees, no premiums, no copays, no deductibles. Just healthcare—when you need it, where you need it, so you can stay healthy.
"I'm so proud to be the lead sponsor of the Medicare for All Act, and I won't stop fighting until everyone can get quality healthcare without having to worry about what it might cost. Thank you so much to the 100+ members who have cosponsored our bill, H.R. 3421!" she added. "It's time for a healthcare system that actually works. Let's get Medicare for All done."
The bill, which has 14 co-sponsors in the Senate, has no chance of advancing in the current Congress and would likely face difficulty in the next one, even if Democrats won both chambers in the November election. Republican former President Donald Trump spent his first term attacking the U.S. healthcare system, while Democratic Vice President Kamala Harris has dropped her support for Medicare for All, saying recently that she wants to "maintain and grow the Affordable Care Act."
Still, patients, providers, and progressive lawmakers continue to demand a transition to a public system that serves all Americans—and Jayapal wasn't alone in pointing to the Commonwealth report as proof of the need for a major overhaul.
The other nine nations analyzed "have found [ways] to meet residents' basic healthcare needs, including universal coverage," University of California Health executive vice president Dr. Carrie L. Byington stressed on social media.
"The only clear outlier is the [United States], where health system performance is dramatically lower," Byington added. "Americans deserve better. #HealthcareForAll."
"Even though he may be able to afford some of the most expensive lawyers in America—no, Dr. de la Torre is not above the law," said Sen. Bernie Sanders.
A U.S. Senate panel led by Sen. Bernie Sanders voted Thursday in favor of holding Steward Health Care CEO Ralph de la Torre in civil and criminal contempt after he refused to appear at a hearing last week in defiance of a congressional subpoena.
The Senate Health, Education, Labor, and Pensions (HELP) Committee passed the contempt resolutions in a near-unanimous vote, with Sen. Rand Paul (R-Ky.) abstaining.
The vote marked "the first time in modern American history that the HELP Committee has issued a civil or criminal contempt resolution," according to Sanders' office.
The approval of the two resolutions, which now head to the full Senate for consideration, could mean jail time for de la Torre, who has come under fire for purchasing two yachts as his private equity-backed company faced financial turmoil. De la Torre was paid a salary of nearly $4 million the year before Steward ultimately filed for bankruptcy.
A lawyer for de la Torre insisted in a letter to Sanders (I-Vt.) on Wednesday that the CEO "lacks the authority to speak on behalf of Steward with respect to the ongoing bankruptcy proceedings and he is prohibited by a federal court order from doing so."
Ahead of Thursday's vote, Sanders said de la Torre's decision not to comply with the Senate HELP Committee's subpoena was "unfortunate and unacceptable."
"For months, this committee has invited Dr. de la Torre to testify about the financial mismanagement and what occurred at Steward Health Care. Time after time he has arrogantly refused to appear," said Sanders. "Dr. de la Torre has given us no choice but to move forward this morning on two resolutions to enforce the subpoena and to hold him accountable for his actions."
"Even though Dr. de la Torre may be worth hundreds of millions of dollars, even though he may be able to own fancy yachts and private jets and luxurious accommodations throughout the world, even though he may be able to afford some of the most expensive lawyers in America—no, Dr. de la Torre is not above the law," Sanders added.
Sen. Ed Markey (D-Mass.), a member of the Senate panel, said in a statement that "as a physician and as the CEO of Steward from its founding, there is no one who understood the potential consequences of Steward's failures more than Dr. Ralph de la Torre."
"Dr. de la Torre led Steward when it sold out hospital real estate to Medical Properties Trust and allowed [the private equity firm] Cerberus to extract over $800 million in profit," said Markey. "Dr. de la Torre led Steward as eight hospitals closed, 2,000 patients were endangered, and at least 15 patients died. Dr. de la Torre led Steward as it filed for bankruptcy."
"We are making clear to Dr. de la Torre, the Steward Board of Directors and senior leadership, and other CEOs, private equity investors, and corporate executives who treat the healthcare system like their piggy bank: Your millions do not shield you from accountability to a legal order issued by the United States Senate," Markey added.
The Senate panel's passage of the two resolutions comes a week after Steward nurses told the committee—in de la Torre's absence—that Steward-owned hospitals were disastrous for patients and healthcare workers. A report published by the Senate HELP Committee earlier this month found that "death rates for certain conditions at some Steward-owned hospitals increased as death rates for those same conditions held steady or decreased across the country."
Lisa Gilbert, co-president of the consumer advocacy group Public Citizen, said in a statement Thursday that the Senate panel's "actions today are an important reminder that no one is above the law."
"Congress and the American people deserve answers on what happened under Dr. de la Torre's watch at Steward, as his damaging actions had real consequences for patient health," said Gilbert. "Dr. de la Torre and others like him should not be able to ignore congressional subpoenas without accountability."
If the full Senate approves the criminal contempt resolution, it would "refer the matter to the U.S. Attorney for the District of Columbia to criminally prosecute Dr. de la Torre for failing to comply with the subpoena," Sanders' office said.