CVS, Cigna, and UnitedHealth inflated cancer and HIV drug prices, FTC says

Three major drug middlemen needlessly marked up generic drugs for cancer, HIV, and multiple sclerosis to generate $7.3 billion in revenue, The Federal Trade Commission (FTC) said in a report released today.

The FTC alleged that the ‘Big 3’ pharmacy benefit managers (PBMs)—Caremark Rx, LLC, which is owned by CVS Health (CVS-0.18%); Express Scripts, Inc., which is owned by Cigna (CI+0.58%); and OptumRx, Inc. (UNH+0.03%), which is owned by UnitedHealth Group — “netted such significant revenues all while patient, employer, and other health care plan sponsor payments for drugs steadily increased annually.”

The findings were revealed in the agency’s second interim staff report on the prescription drug middleman industry.

In theory, PBMs are meant to be third-party companies that are middlemen between drugmakers and insurance providers. But the FTC said last year this proves problematic because PBMs are “vertically integrated” with both large health insurers and specialty and retail pharmacies.

The results have created a system where “leading PBMs now exercise significant power over Americans’ ability to access and afford their prescription drugs,” the FTC said.

In their second report, the FTC outlined how this came at the expense of consumers, who were left with no option but to spend on marked-up drugs that should have cost less. In some cases, the FTC said that drugs dispensed at the companies affiliated pharmacies were marked up “hundreds and thousands of percent.” The FTC reported that a disproportionate share of specialty drugs marked up more than $1,000 per prescription were done so by PBMs operated by CVS, Cigna, and UnitedHealth, compared to unaffiliated pharmacies. The agency also suggested that the three companies “may be steering highly profitable prescriptions to their own affiliated pharmacies.”

FTC Chair Lina Kahn said in a statement Tuesday it is clear these three PBMs “hiked costs for a wide range of lifesaving drugs, including medications to treat heart disease and cancer.”

Kahn, who is set to leave the FTC when President-elect Donald Trump takes office, said she believes “the FTC should keep using its tools to investigate practices that may inflate drug costs, squeeze independent pharmacies, and deprive Americans of affordable, accessible healthcare—and should act swiftly to stop any illegal conduct.”

Trump has nominated Federal Trade Commissioner Andrew Ferguson to lead the department.