The Federal Trade Commission (FTC) has taken action against the three largest pharmacy benefit managers (PBMs) in the United States, accusing them of manipulating the insulin market to prioritize their profits over patient affordability. The lawsuit, filed against UnitedHealth Group’s Optum Rx, CVS Health’s Caremark, and Cigna’s Express Scripts, alleges that these companies, which collectively distribute the majority of the nation’s prescriptions, have created a system that “artificially” inflates the list prices of insulin through their control of drug formularies and rebate negotiations.

PBMs act as intermediaries between drug manufacturers, health insurers, and pharmacies. They negotiate rebates with pharmaceutical companies and decide which medications are covered by insurance plans, a power that effectively allows them to influence which drugs patients can affordably access. According to the FTC, the PBMs have used this influence to demand high rebates from insulin manufacturers in exchange for preferential placement on insurance formularies. As a result, cheaper alternatives have been excluded, driving up the price of insulin for millions of Americans who depend on the medication to manage diabetes.

The complaint outlines how this system works to the detriment of patients. By favoring insulins with higher list prices that come with bigger rebates, PBMs increase their own profits while forcing consumers to pay inflated costs. This rebate system, the FTC claims, has distorted the market and contributed to the staggering rise in insulin prices.

The FTC’s investigation suggests that the drugmakers have raised prices to meet PBMs’ demands for higher rebates, compounding the affordability crisis for patients. The agency has expressed concern that both PBMs and manufacturers have engaged in behavior that undermines competition and violates principles of fair trade.

PBMs, for their part, have denied the allegations. CVS Caremark issued a statement defending its practices, asserting that it has worked to make insulin more affordable and rejecting the FTC’s claims as unfounded.

The FTC's complaint aims to reform how PBMs operate, restore competition in the insulin market, and provide relief to patients burdened by soaring drug costs. Since 2022, the FTC has investigated PBM practices, focusing on their role in shaping medication prices and access. Insulin, a vital drug for millions of Americans with diabetes, has become a key example of how rebate negotiations can distort the market, making it increasingly unaffordable for many who rely on it to survive.