The FTC sued pharmacy benefit managers over their roles in increasing insulin prices over the past decade. The News talked to experts about insulin prices and their impact on patients.
In 2019, Campbell Mitchell SPH '25, then a college student at Western Connecticut State University, headed to his local pharmacy to pick up his monthly prescription of insulin. As a Type 1 diabetic, Mitchell has always set aside money for medical insurance that covers the price of the expensive, but life-saving, medication. After ordering his regular prescription that day, however, Mitchell was shocked to see its price.
Later that year, Mitchell recounted his experience at a government hearing, telling state policymakers that his insulin, now at a monthly payment of $3,500, cost more than his tuition.
In recent years, many patients like Mitchell have faced soaring insulin costs. These prices have been exacerbated by pharmacy benefit managers, or PBMs, middlemen between drug manufacturers and insurance companies. Last month, the Federal Trade Commission sued three major PBMs -- CaremarkRX, Express Scripts and OptumRX -- accusing them of contributing to these price hikes through unfair business practices.
"Insulin is as vital to humans as oxygen," Elizabeth Pfiester, type one diabetic and founder of T1International, a diabetes advocacy organization, told the News. "Yet the pharmaceutical industry is charging unaffordable costs for this basic medicine that costs only a few dollars to produce. Insulin is a poster child for the drug pricing crisis in America."
More than 1.8 million Americans have type one diabetes. Due to an autoimmune condition, their bodies produce little to no insulin, which is a hormone necessary for turning food into energy.
According to Mitchell, when a body without insulin can't utilize glucose, its main source of energy, it will attempt to use fat for energy. The side products of turning fat into energy are ketone bodies, which make the blood more acidic, leading to a cascade of health problems.
"You will begin to lose energy, vomit regularly, get severe dehydration," Mitchell told the News. "This could lead to organ failure and even death."
Insulin drugs for type one diabetics, thus, are necessary for survival.
Middleman's role
According to Mitchell, pharmacy benefit managers, or PBMs, appeared in the healthcare industry during the 1980s.
PBMs are the middleman between drug manufacturers, pharmacies and health insurance companies. Their role is to negotiate the best discount a drug manufacturer can provide to insurance companies after the drug is sold. In theory, these discounts lower the overall spending on drugs for insurance companies and the overall drug cost for the patient.
PBMs let insurance companies know which manufacturers to purchase drugs from based on the drug's discount. This can then incentivize drug manufacturers to increase the list price, which is the initial price of a drug for an insurance company without any discounts.
When manufacturers increase the list price of drugs, the discount that the manufacturer will eventually have to provide for the insurance company also increases. PBMs keep a portion of the discount as profit; as the discount increases, the profits the PBMs receive increase.
Many patients pay for insulin based on a percentage of the drug's list price, not the discounted price. The higher the list price, the more unaffordable the drug becomes, regardless of the discount offered to insurance companies. Those who are uninsured have to pay an increasingly higher list price out of pocket.
If a certain drug manufacturer increases its list price substantially, the insurance company could receive a higher discount. In this scenario, PBMs can suggest to insurance companies to switch to this brand to receive a higher discount. This leads to unexpected increases in insulin prices for patients on an insurance plan.
"This is happening for all drugs, but this is really bad for insulin," Mitchell said.
There aren't many insulin manufacturers to choose from, so there is "not a lot of competition in the first place," according to Mitchell. Additionally, insulin is a "life or death" drug, and patients who rely on it will be forced to buy it regardless of the price.
The effects of insulin price gouging
Higher insulin prices can be life-altering. Mitchell has encountered people forced to work a job they hate so they can stay on insurance, hesitant to leave abusive relationships to continue to access insulin or holding off college because they can't afford it alongside their insulin.
"The threat of those higher prices deters a lot of things and dictates a lot of life decisions," Mitchell said. "Patients are now even taking less than what they've been prescribed, which increases long-term risk complications like blindness, organ failure, limb loss. I've heard from children who will skip lunch at school because they don't have enough insulin to eat a meal that day."
According to Dr. Reshma Ramachandran, a professor of general internal medicine and physician at the School of Medicine, insulin price gouging has forced her to change the way she prescribes insulin.
She told the News that in some cases she has to de-prescribe certain medications, ration others, find the cheapest generic drugs or find drug vouchers for her patients.
According to Dr. Laura Nally, assistant professor of pediatric endocrinology and diabetes at the School of Medicine, the insulin price often leaves her patients helpless and terrified, impacting their mental well-being as well as their physical since they do not know how they will get the next life-saving dose.
The rise in prices affects not only low-income families but also the middle class, according to Mitchell, which he believes is one of the reasons politicians and government bodies are paying more attention to the issue.
The FTC Lawsuit
Last month, the Federal Trade Commission, or FTC, sued PBMs, including Express Scripts over their alleged role in incentivizing higher drug prices. The FTC believes that the PBMs participated in unjust competition and practices, incentivizing manufacturers to increase insulin list prices.
"Express Scripts intends to vigorously defend itself to protect our ability to lower drug costs for the thousands of clients and the millions of Americans we serve," Andrea Nelson, chief legal officer of The Cigna Group, who owns Express Scripts, wrote in a statement. "In a world where pharmaceutical manufacturers continue to raise the price of medications every year, Express Scripts' work is more important than ever, and we won't allow baseless suits and false information to deter us from our mission."
Express Scripts argues that the FTC lawsuit will drive up drug prices, hurting not only the patients but employers and even the federal government itself.
Pfiester believes that the FTC lawsuit is "an important step to ensure that giant corporations are held accountable" -- insulin manufacturers, who ultimately set prices, "must be held accountable in the same way."
According to Mitchell, if the FTC succeeds in its lawsuit, PBMs could begin operating independently from insurance and there could be a breakup between the three PBMs to generate more competition. However, the immediate problem of manufacturers increasing drug prices won't go away, as the actual process of reducing drug prices takes time.