(480) 923-0802

Our Take: FTC, lawmakers focus on insulin in continued attempts to make prescription drugs more affordable

Jun 27, 2022

The Federal Trade Commission (FTC) issued an enforcement policy, with Chair Lina Khan saying the move “should put the entire prescription drug industry on notice.” Meanwhile, a bipartisan duo of senators have drafted yet another bill that would cap insulin prices.

Both actions are part of the ongoing efforts by regulators and Congress to rein in the high prices consumers are paying for their prescription medications.

The FTC is considering resurrecting enforcement of the Robinson-Patman Act, which “prohibits payments to agents, representatives, and intermediaries who represent another party’s interests in connection with the purchase or sale of goods,” according to the enforcement policy.

Specifically, the FTC noted in a press release that “[p]aying or accepting rebates or fees in exchange for excluding lower cost drugs may constitute commercial bribery under Section 2(c) of the Robinson-Patman Act, which prohibits compensating an intermediary to act against the interests of the part it represents in the transaction.”

The language refers to the rebates and fees that drugmakers pay to pharmacy benefit managers (PBMs) to gain a favored place on health plan formularies and to quash competition from lower-cost generics and biosimilar alternatives.

Enforcement of the Robinson-Patman Act has languished over the years, but the law is one of several the FTC can use to clamp down on “illegal bribes and rebate schemes that block patients’ access to competing lower-cost drugs.”

Arrangements between drug companies and PBMs with regard to rebates and fees paid for formulary placement could also run afoul of the Sherman Act, the Clayton Act, and the FTC Act, according to the agency.

“[W]e won’t hesitate to bring our full authorities to bear,” Khan said. “Protecting Americans from unlawful business practices that are raising drug prices is a top priority for the Commission.”

The FTC homed in on the steep increases in the list price of insulin, which it said has increased by more than 300% in the last couple of decades.

In a statement she issued about the enforcement policy, FTC Commissioner Rebecca Kelly Slaughter referred to insulin as a “case study in the constellation of challenges that surround America’s health care crisis — access, equity, intermediaries, interchangeability, and patent ever greening, to name a few. The stories we have heard about diabetics risking their lives by forgoing pricey insulin are nothing short of horrifying.”

Sens. Susan Collins, R-Maine, and Jeanne Shaheen, D-N.H., have been working together for the past few years to pass legislation that would address the high cost of insulin.

Their latest legislative draft, which they unveiled Wednesday, would cap the monthly cost of insulin at $35 — similar to a bill passed by the House in March. Majority Leader Chuck Schumer, D-N.Y., said he would “put the bipartisan legislation on the Senate floor very soon.”

“At least one in four insulin users report rationing their use because they can’t afford it, putting their health and lives at risk in the process,” Schumer noted.

Endpoint News reported that the current U.S. price of insulin “is more than 10 times that of 33 other comparable countries.”

The Senate is also making progress on legislation that would prohibit certain PBM practices, including reimbursement payment clawbacks and price spreading. As the name implies, the Pharmacy Benefit Manager Transparency Act, which was introduced in late May, would improve transparency around PBM practices as well, and would give the FTC and state attorneys general the authority to enforce the law if it is passed.

The Senate Committee on Commerce advanced the PBM Transparency Act to the full Senate last week.

Earlier this month, members of the House Education and Labor Committee recently sent a letter to the Government Accountability Office requesting a study of how PBMs are reimbursed and how formularies and rebates affect drug spending.

Our Take: At this point, to say that PBMs are in the hot seat is an understatement. One can almost feel the blisters forming.

They’ve been there before, of course. But this time it seems that corrective action is more likely to be taken. With the federal government and Congress ramping up efforts to investigate the effect that PBM practices have had on drug prices, the top handful of PBMs have to be feeling the heat, to be sure.

And let’s be real. With the Biden administration unable to slow rising gas prices and grocery bills in a midterm election year, they have to show some muscle where they can actually have an impact on voters’ wallets. Lowering drug costs is a political win no matter what side of the aisle you’re on.

As we’ve noted in recent coverage of this topic, though, the largest PBMs —OptumRx, CVS Caremark, and Express Scripts — have extremely deep pockets. They can easily afford to pay fines and settle litigation.

But maybe all of this unwanted attention will spur them into taking more measures like the Patient Assurance program Express Scripts launched a couple of years ago, which capped the costs of diabetes medications.

Initially, the price of insulin was capped at $25 for a month’s supply, for eligible members. The program was subsequently expanded to include other diabetes drugs.

Express Scripts’ parent company, Evernorth (a Cigna business unit), recently released data for 2021 showing that adherence improved 5.7% among patients enrolled in the program who had annual household income of less than $50,000. The data also showed that the 220,000 patients enrolled in the program collectively received $42.7 million in financial relief.

Nearly $43 million. That’s just one program at one PBM for one health condition. Imagine how much “relief” patients across the country could receive if there were many more of these programs for drugs used to treat more diseases.

FTC Commissioner Slaughter noted in her statement that “the path to untangling the problem of high drug prices is paved with multiple entities that play a role in the underlying cost structure and resulting prices stakeholders pay.”

Referring to the FTC’s investigations, she said the agency’s staff has “the time and space to follow the facts where they lead” and cautioned that while PBMs may be their initial focus, “pharmaceutical manufacturers and other market participants are not off the hook if they have violated the law.”

It may be slow in the making, but maybe more relief for those who rely on prescriptions drugs is finally on the way.

What else you need to know
Meta, Facebook’s parent company, is being sued for allegedly collecting patient data on hospitals’ websites via its Pixel tracking tool without patients’ consent, potentially in violation of HIPAA and other laws. The case, in which an anonymous patient is the defendant, was filed in the Northern District of California on behalf of “millions of other Americans whose medical privacy has been violated.” Meta offers the tracker as an analytics tool to website owners. The tracker was found on the appointment scheduling pages of websites for 33 of 100 leading hospitals, according to an investigative report by The Markup, and in the password-protected patient portals of seven major health systems. In the lawsuit, the defendant claims “at least 664 hospital systems or medical provider web properties where Facebook has received patient data via the Facebook Pixel” were identified. Among the data collected were users’ IP addresses, physician names, appointment times, search terms used during the visit, and medication information.

United Surgical Partners International (USPI), a subsidiary of Tenet Healthcare, signed a definitive agreement with United Urology Group to jointly operate 22 ambulatory surgery centers (ASCs). Under the agreement, USPI will acquire a portion of United Urology Group’s ownership stake in existing and new ASCs in Maryland, Colorado, and Arizona. The deal, which is expected to close in the third quarter, will add more than 140 urology physicians to USPI’s partnership network.

K Health and Mayo Clinic are collaborating on a predictive model to improve the treatment of hypertension. K Health, a digital health company, has built an algorithm “that leverages clinical insights from Mayo Clinic Platform_Discover,” according to a press release. Platform_Discover is Mayo Clinic’s digital health care initiative. The goal of the collaboration is to offer the board-certified internists who practice on K Health’s virtual platform a more targeted and personalized approach to treating hypertension. “With less trial and error when it comes to hypertension treatment, we have the potential to not only improve quality of life and outcomes, but also decrease medical costs for thousands of people,” said Dr. Edo Paz, a cardiologist who is K Health’s vice president of medical.

Colorado will be the first state to use an amended federal waiver to create a public health insurance option. The Department of Health and Human Services (HHS) announced that it had approved the state’s Section 1332 State Innovation Waiver amendment request, paving the way for the “Colorado Option.” Colorado created a state-based reinsurance program through its existing Section 1332 waiver; that program was implemented in 2020. HHS said the reinsurance program is authorized to continue under the amended waiver and will work in tandem with the Colorado Option to further reduce premiums by an expected average of approximately $132 per person per month. The public health plan option will be available to eligible small employers and to residents who enroll through the individual market for the 2023 plan year.

HCA Healthcare and McKesson will combine their cancer research arms. The two companies signed an agreement to create a fully integrated oncology research organization by combining McKesson’s US Oncology Research (USOR) and HCA’s Sarah Cannon Research Institute (SCRI). As part of the agreement, McKesson will acquire Genospace, which is SCRI’s personalized medicine platform. Genospace will power the joint venture’s oncology data and analytics capabilities and assist HCA and McKesson in identifying the most appropriate treatments or clinical trials for their patients. The transaction is expected to close this year; terms were not disclosed. McKesson will own 51% of the joint venture and will have operating control.

What we’re reading
Lawmakers v. The Scientific Realities of Human Reproduction. NEJM Editorial, 6.24.22

Contact Darwin Research Group and we will get right back to you.