U.S. regulators are cracking down on bribes and rebate schemes between drugmakers and pharma middlemen, with a specific focus on mounting insulin prices.
The Federal Trade Commission (FTC) said it would ramp up its enforcement efforts against such practices that “block patients’ access to competing lower cost drugs,” voting 5-0 Thursday to issue its new policy statement.
The move comes a little more than a week after the FTC unveiled plans to probe six of the largest PBMs in the U.S.
With the latest enforcement policy statement, meanwhile, FTC warns that it’s putting pharma companies and prescription intermediaries “on notice” that rebates and anti-competitive fees to exclude cheaper drug alternatives could run afoul of competition and consumer protection laws.
Most patients’ insurance covers at least part of their prescription medicine costs. Those health plans are typically orchestrated by so-called drug middlemen like pharmacy benefit managers and often use formularies to define the medicines they’ll cover. In turn, drugmakers use rebates to secure spots for their medicines on formularies or “preferred tiers of formularies to ensure those drugs are covered,” FTC added.
Thing is, those rebates are often conditioned on the drug keeping its preferred formulary position, and some rebates and fees hinge on the sales volume of certain pricey prescription meds, FTC said.
“In addition to other factors, some have suggested that high rebates and fees to PBMs and other intermediaries may incentivize higher list prices for drugs and discourage coverage of the lowest-cost products,” the regulator pointed out in its release.
The FTC’s rebate practice concerns extend specifically to insulin, which some 8 million people in the U.S. use to keep their diabetes in check, FTC noted. The regulator flagged the fact that insulin list prices have “soared over the last two decades, increasing by over 300 percent.”
That can translate into higher costs for certain patients, the FTC noted. As of 2017, the average list price for a one-year supply of insulin clocked in at around $6,000. Uninsured patients had to pay out-of-pocket costs up to $1,288, while those with insurance paid around $613 out-of-pocket on the low end.
There are several legal levers the FTC can pull when “dominant drug companies pay rebates and fees to middlemen to foreclose competition from less expensive generic and biosimilar alternatives,” the commission said.
Under certain federal laws, the industry’s rebate shenanigans could constitute unreasonable agreements in restraint of trade, unlawful monopolization or exclusive dealing, the FTC said.
Further, “inducing” PBMs and other intermediaries to slot pricier drugs on their formularies instead of cheaper alternatives could prove anti-competitive under FTC regulations when the cost burden is shifted to payers and patients.
Finally, paying or accepting rebates or fees to exclude cheaper drugs from prescribing lists “may constitute commercial bribery,” FTC said.
As for the FTC’s separate investigation into six PBM juggernauts, the regulator earlier this month said it had sent compulsory orders to CVS Caremark, Express Scripts, Optum Rx, Humana, Prime Therapeutics and MedImpact Healthcare Systems, requiring them to submit information and records on their business practices.
Meanwhile, this is hardly the first time steep insulin prices have raised anti-competitive flags. Last month, Eli Lilly, Sanofi and Novo Nordisk were slapped with a lawsuit by Arkansas, which is suing the trio of diabetes giants and top PBMs for allegedly driving up the cost of insulin.
Arkansas Attorney General Leslie Rutledge argued the companies conspired with PBMs to spike insulin prices and drive up revenues, making the treatments unaffordable for diabetics in her state.