FTC Chairman Lina Khan presents the House Appropriations Subcommittee on Financial Services and General Government entitled “Fiscal Year 2025 Requests to the Federal Trade Commission” at the Rayburn Building on Wednesday, May 15, 2024. testify at the public hearing.
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CVS Health, united health group and Signa Federal Trade Commission Chair Lina Khan and two other commissioners have asked to recuse themselves from a lawsuit that accuses companies and other drug intermediaries of increasing profits while jacking up the cost of insulin for Americans. are.
In separate complaints filed with the FTC on Tuesday night, the companies allege that all three commissioners have an extensive track record of making public statements suggesting significant bias against the company’s so-called pharmacy benefit managers. claimed to have it.
The companies accused Khan and Commissioners Álvaro Bedoya and Rebecca Kelly Slaughter of falsely claiming that PBMs are “price gougers” with significant control over the pricing and access of drugs such as insulin. CVS said these statements showed the commissioners had “prejudged the matter” and therefore their participation in the lawsuit “violated due process.”
“If the opposite of ‘complete impartiality’ is ‘blatant bias,’ the three commissioners would easily meet even that standard,” CVS said in its 23-page motion.
Meanwhile, UnitedHealth’s 17-page motion states, “Any judge who makes such a statement about a litigant at the outset of a case should immediately recuse himself for blatant bias.”
Cigna said in one of the three motions filed that Khan “prejudged the facts and law relevant to this litigation.”
“She has repeatedly falsely claimed that PBMs ‘control’ drug pricing and patient access to medicines,” Cigna said.
The FTC filed its complaint through what is called an administrative proceeding, which begins proceedings before the agency’s administrative judges, who hear cases and issue opinions. FTC commissioners then vote based on their opinions.
The FTC declined CNBC’s request for comment on the motion Wednesday.
Including other giant companies Amazon and metaunsuccessfully sought to have Khan disbarred from previous cases and investigations, citing concerns about his objectivity. Khan resisted these calls, saying he had never prejudged any incident or set of facts.
Last month, the FTC filed suit against three major PBMs: CVS Health’s Caremark, UnitedHealth Group’s Optum Rx, and Cigna’s Express Scripts. All of them are owned or affiliated with health insurance companies, and together they control about 80% of the nation’s prescriptions, according to the FTC.
PBMs are at the heart of the U.S. drug supply chain, negotiating drug rebates with manufacturers on behalf of insurance companies, creating lists of priority drugs for health insurance coverage, and reimbursing prescriptions to pharmacies. The FTC has been investigating PBMs and their role in insulin prices since 2022.
The agency’s lawsuit alleges that the three PBMs have created a “perverse” system that prioritizes high rebates from manufacturers, leading to “artificially inflated insulin prices.” The complaint also alleges that PBMs prioritize higher-priced insulin even when lower-priced insulin is available.
The lawsuit also involves group purchasing organizations (GPOs), affiliates of PBMs that mediate the purchase of pharmaceutical products for hospitals and other health care providers. Zinc Health Services serves as a GPO for Caremark and Emisar Pharma serves as a GPO for OptumRx. Ascent Health Services is a GPO of Cigna.
The lawsuit is just one of several headwinds facing CVS. The company’s stock has fallen more than 20% this year as the insurance sector grapples with rising medical costs and reimbursement pressure on pharmacies.
CVS is hiring advisors to conduct a strategic review of its business, which could include separating its insurance and retail pharmacies. It is unclear what position Caremark will be in if the company breaks up.
A general view showing the CVS Health Customer Support Center sign at CVS Headquarters, CVS Health Corp., in Woonsocket, Rhode Island, USA, on October 30, 2023.
Faith Ninivaggi | Reuters
In Tuesday’s motion, CVS argued that Khan has disparaged PBMs throughout his professional career. For example, the company said in 2022 that Khan “substantially determines which drugs are prescribed, which pharmacies are available to patients, and how much patients pay at the pharmacy counter.” quoted the statement.
CVS similarly criticized Slaughter’s previous comments about PBMs’ “alarming,” “unacceptable,” and “rotten” kickback practices and how they create “distortions of competition in the pharmaceutical market.” Point out what she believes is true. Meanwhile, the company cited Mr. Bedoya’s suggestion that a “substantial portion of the blame” for rising insulin prices lies with rebates demanded by PBMs.
CVS called the three commissioners’ previous statements about Caremark and other PBMs “inaccurate claims.”
The healthcare giant also claimed during the FTC investigation that three commissioners attended private events to help raise money for anti-PBM lobbying groups. In its motion, CVS alleged that organizers of these events denigrated PBMs as “bloodsuckers” and “vampires.”
As many patients struggle to afford prescription drugs, the Biden administration and lawmakers on both sides of the aisle are ramping up pressure on PBMs to make their business practices more transparent. Americans pay, on average, two to three times more for prescription drugs than patients in other developed countries, according to a White House fact sheet.
