As some of you who still follow me may realize, back in 2021, I set out to make sure the proper government agency addressed the wrongdoing going on in the U.S. insulin market. The reason Americans were paying insane prices for insulin (10 mL vials of widely-prescribed insulin varieties were being sold for more than $200 in the U.S., compared to about $37 to $48 in virtually every other country on earth) and that was because Americans were being forced to pay for bribes/kickbacks. Admittedly, they were "legally-exempted" kickbacks, but we were paying for bribes nevertheless, which was not only wrong (and patients were suffering for it), but quite likely illegal.
I set my sights upon the U.S. Federal Trade Commission (FTC). I had not initially considered FTC before, but it occurred to me that FTC was the only government agency which has the power to do it. This was the entity which broke-up AT&T (the old "Ma Bell") in 1984, where my father was employed for my entire childhood.
Broadly speaking, the role of the FTC is to enforce federal consumer protection laws that prevent fraud, deception and unfair business practices. A new administration might try to change that role but that's the reason FTC exists (and by law, commissioners must be from both major political parties). The Commission also enforces federal antitrust laws that prohibit anticompetitive mergers and other questionable business practices that could lead to higher prices, fewer choices, or less innovation. Again, a new administration may attempt to re-write that reality, but that's the role which Congress established for the FTC when the FTC Act was passed into law back in 1914.
Some of my move was due to a timing issue.
With a conservative in the White House and a Congress either unwilling and/or unable to address the issue, I planned to jump upon the issue as soon as President Biden was inaugurated in 2020. While anticompetitive issues should theoretically be important to conservative lawmakers as well, the practical reality was that big, monopolistic interests have bankrolled conservative political candidates who have vowed for the FTC to take a completely "hands-off" approach to unfair competition and monopolies. So, I acted when the political wind was at my back.
Ideally, diabetes nonprofit organizations should really have pushed for the same, but instead, the big ones (the American Diabetes Association [ADA] and Breakthrough T1D/JDRF) had not really taken much interest, even while they knew very well what was happening (bribery). Instead, the organizations like the ADA adopted a largely ineffective grassroots "Make Insulin Affordable" initiative (it was not even a campaign; see the press release at https://www.prnewswire.com/news-releases/american-diabetes-association-reaffirms-commitment-to-insulin-access-and-affordability-for-all--transparency-on-insulin-pricing-critical-300752216.html for more), but the initiative was mostly toothless, and nothing really happened. I aimed to leverage laws which were already on the books to seek relief. You don't need to thank me; I acted as much in self-interest as in philanthropy.
To its credit, Breakthrough T1D/JDRF did something which was strategically very effective, even if it took several years for patients to realize the benefit of what it did. Recall that on March 3, 2022, Breakthrough T1D (then known as JDRF) announced https://www.prnewswire.com/news-releases/jdrf-announces-support-of-civica-to-manufacture-and-distribute-low-cost-insulin-301495050.html (with specific details about intended pricing) along with nonprofit drug company partner Civica, Inc. (see Civica's concurrent press release at https://www.businesswire.com/news/home/20220303005321/en/Civica-to-Manufacture-and-Distribute-Affordable-Insulin/ for more, including the reveal that it was collaborating with an India-based company known as GeneSys Biologics to actually make the insulin API (the acronym for Active Pharmaceutical Ingredient) inexpensively enough to sell at those prices (and compete with Lilly, Novo Nordisk and Sanofi) announced it intended to introduce biosimilar versions of insulin glargine, insulin aspart and insulin lispro (better known by the trade names of Sanofi Lantus, Novo Nordisk Novolog and Lilly Humalog), which would be sold at a price of no more than $30/vial and $55/box of five prefilled disposable insulin pens, regardless of insurance status. Those biosimilar insulins are currently pending FDA approval decisions. But the intended effect has already happened.
The Civica biosimilar insulin announcement was indeed very disruptive to the underlying pharmaceutical business, because it essentially established a cash price ceiling for most insulins sold in the U.S. Previously, insulin manufacturers had primarily used the rebate-contracting sales model promoted by the big Pharmacy Benefit Managers (PBMs) to sell insulin, with massive discounts given in the form of multi-million dollar cash-rebates (I refer to those rebates as "legally-exempted rebate kickbacks" because that is what they are, and if you describe them that way, no one including Federal lawmakers can misunderstand what they are) which may be (but very frequently were not) passed along to the covered patients.
That Civica insulin move meant that every other biosimilar copy of insulins would be unable to sell their products for any more than $30/vial and $55/box of five prefilled disposable insulin pens. It also put incredible pressure upon Lilly, Novo Nordisk and Sanofi to effectively match those prices. The major insulin manufacturers had previously made moves to sell "unbranded" versions (these insulins are sold under the generic drug name, rather than the brand-name) of several (but not all) of their better-selling insulin analogues.
The unbranded insulin (they are not actually generics or biosimilars because they are made by the innovator companies) initiative began in 2019 when Eli Lilly & Company, Inc. was the first to announce it would introduce a cheaper "unbranded" (sold under the generic drug name) version of Humalog (see https://www.prnewswire.com/news-releases/lilly-to-introduce-lower-priced-insulin-300805560.html for the press release). Rival Novo Nordisk copied the move very soon after (see https://www.prnewswire.com/news-releases/novo-nordisk-launching-additional-us-insulin-affordability-offerings-in-january-2020-300913167.html), although Sanofi did not do so until nearly two years later (see https://www.news.sanofi.us/2022-06-29-Sanofi-to-lower-out-of-pocket-cost-of-insulin-for-uninsured-patients-and-expand-access-in-underserved-communities for its announcement). Those efforts were an effort by pharma to try and circumvent the noncompetitive lock on U.S. insulin prices which PBMs had on the market, and they did work...well, sort of.
Those unbranded insulin introductions were intended to help patients with access to products which were affordable, as long as patients knew where to look, and unfortunately, many did not, nor did pharma invest a penny to promote their existence. While the list price was about half of branded Humalog, savvier patients like me quickly discovered I could buy Lilly Insulin Lispro injection for about 75% less simply by also using a GoodRx coupon. That also happened with Novo Nordisk's unbranded insulins (which the company recently announced it would be discontinuing since its branded insulin price-cuts in the U.S. went into effect). But a year after Lilly introduced the "unbranded" version of Humalog, during a quarterly earnings call with investors, someone asked management for more info on what portion of sales were branded vs. unbranded, and surprisingly, Lilly management revealed that nearly one-third of domestic Humalog sales were the unbranded version of Humalog.
But it was really not until the insulin manufacturers themselves subsequently introduced their own manufacturer coupons (Lilly's coupons were offered at https://www.insulinaffordability.com/, Novo Nordisk's were offered at https://www.novocare.com/diabetes/help-with-costs/savings-offers.html, and Sanofi's were available at https://www.teamingupfordiabetes.com/sanofidiabetes-savings-program), which effectively made their unbranded insulin varieties at a cost of $35/vial or $55/box of 5 insulin pens, and those prices had become a de facto standard available to U.S. patients...again, provided they knew WHERE to look for them. So, I spent considerable energy to ensure people knew about them. Incidentally, today, we also have similar coupons on CGM sensors. And also on 'modern' glucagon rescue products. If you read the web page version (not on a mobile device) of this blog, you will find them all listed in the right-hand margin.
The American Rescue Plan of 2021 (see https://progressivepolicyinstitute.medium.com/are-we-on-the-cusp-of-a-new-drug-pricing-paradigm-fdf611c009b3 for details on how that worked) also played an important role, because that law eliminated a cap on drug rebates which were payable to MedicAID, starting on Jan. 1, 2024. In essence, the American Rescue Plan of 2021 eliminated a "cap" on rebates which were payable to Medicaid, meaning companies which sell older, but heavily-rebated (to PBMs) medicines such as insulin were faced with the prospect that they might actually be forced to PAY Medicaid for their rebated-drugs if their "rebate" marketing expense caused drug prices to rise faster than inflation, and there was no way pharma would ever do that. So, they slashed prices to avoid that predicament. That incentivized Lilly, Novo Nordisk and Sanofi (and to a slightly lesser extent, Biocon) to slash their insulin list prices in order to avoid negative pricing consequences
So on March 1, 2023, in recognition of everything that was happening, Eli Lilly & Company, Inc. https://www.prnewswire.com/news-releases/lilly-cuts-insulin-prices-by-70-and-caps-patient-insulin-out-of-pocket-costs-at-35-per-month-301758946.html made the first move to slash insulin prices, then on March 14, 2023 Novo Nordisk, Inc. https://www.prnewswire.com/news-releases/novo-nordisk-to-lower-us-prices-of-several-pre-filled-insulin-pens-and-vials-up-to-75-for-people-living-with-diabetes-in-january-2024-301771409.html did the same, then on March 16, 2024 Sanofi-Aventis U.S. LLC (and its subsidiaries) https://www.globenewswire.com/en/news-release/2023/03/16/2629188/0/en/Press-Release-Sanofi-cuts-U-S-list-price-of-Lantus-its-most-prescribed-insulin-by-78-and-caps-out-of-pocket-Lantus-costs-at-35-for-all-patients-with-commercial-insurance.html all announced major list price cuts for their (but patent-expired) branded and unbranded insulins (duplicates sold under the generic drug name in an effort to bypass PBM-driven price markups), and in order to pay for those deep price-cuts, the major branded insulin manufacturers would simply disintermediate the PBM's from the transactions (they would no longer pay PBM kickbacks). In other words, they would slash prices on patent-expired insulins, and to pay for the massive price-markdowns, they simply cut the PBM's out of the transaction by no longer paying them legally-exempted rebate kickbacks on insulins.
The FDA also played a small role to enable the biosimilar rush to happen. Specifically, the Affordable Care Act provision known as Biologics Price Competition and Innovation Act (BPCI Act) which became law in 2010 (see https://www.fda.gov/news-events/press-announcements/statement-fda-commissioner-scott-gottlieb-md-new-actions-advancing-agencys-biosimilars-policy AND https://www.fda.gov/news-events/press-announcements/statement-fda-commissioner-scott-gottlieb-md-agencys-continued-efforts-bring-competition-insulin for more) formally implemented a much-needed policy change. But the FDA waited for a decade before it acted, whereby it transitioned certain biological products currently approved as "drugs" under the Federal Food, Drug, and Cosmetics Act (FD&C) to be licensed as "biologics" under the Public Health Service Act (PHS), thereby making them subject to biosimilar competition for the first time. That enabled many biosimilar versions of bestselling insulins to have a viable approval pathway to market with the FDA, while it also enabled less costly competition to come to market for the first time.
Right now, biosimilar insulins from Civica (via the company's CivicaScript operating unit), as well as from Sandoz, and also a number of copies of some (but not all) insulin analogues from such companies as Biocon, Lannett Company and Amphastar Pharmaceuticals all expect FDA approval decisions at any time, most likely starting in the first quarter of 2025. In addition, copies of all of the three bestselling insulins are also now in development from Chicago-based Meitheal Pharmaceuticals as well.
That new reality essentially forced Lilly, Novo Nordisk and Sanofi to simply abandon the rebate-contracting sales model for insulins. Of course, Novo Nordisk (in particular) is still paying PBMs massive rebate kickbacks in order to keep all competing GLP-1 inhibitor drugs (including generics) "off-formulary" (it's almost as if Novo Nordisk's U.S. unit learned absolutely nothing from what happened on insulin sold in the U.S.).
But who was working to ensure that the horrendous wrongdoing from PBMs no longer happened?
The answer is no one was.
Until I stepped in, and I allied myself with various like-minded independent pharmacy organizations including the National Community Pharmacists Association (NPCA) to push the FTC to investigate corporate wrongdoing at the biggest PBMs, not one single government entity or nonprofit organization was working on the illegal (or legally questionable) PBM activity.
So, I worked to make that happen (and luckily, I was in a position to make it happen). It began when FTC held "open meetings" in 2020, and in every one of those meetings, someone spoke and mentioned PBM wrongdoing. It seemed very clear that an investigation of the PBM behaviors was in order. My motive was to end this criminal behavior, at least related to the sale of insulin.
On June 6, 2022, the FTC voted unanimously on a bipartisan basis (including both Trump-named FTC commissioners) to initiate a comprehensive 6(b) study of the Pharmacy Benefit Manager (PBM) Industry business practices (see the news release at https://www.ftc.gov/news-events/news/press-releases/2022/06/ftc-launches-inquiry-prescription-drug-middlemen-industry for more details). The FTC referred to that study as "FTC Matter No. P221200" and FTC released its Interim Report" https://www.ftc.gov/news-events/news/press-releases/2024/07/ftc-releases-interim-staff-report-prescription-drug-middlemen from that study on July 9, 2024.
On September 20, 2024, the FTC filed a legal "complaint" (a lawsuit; see https://www.ftc.gov/news-events/news/press-releases/2024/09/ftc-sues-prescription-drug-middlemen-artificially-inflating-insulin-drug-prices for more) in Administrative Court alleging that CVS Health's Caremark Pharmacy Benefit Manager ("PBM") business, rival Cigna's Evernorth/Express Scripts PBM and another rival UnitedHealth's Optum Rx PBM business had all collectively accepted money in the form of multimillion dollar cash "rebate" kickbacks from drugmakers in exchange for keeping lower-cost insulin varieties off their preferred drug formularies (lists of approved drugs). See https://www.ftc.gov/news-events/news/press-releases/2024/09/ftc-sues-prescription-drug-middlemen-artificially-inflating-insulin-drug-prices for the court filing. The lawsuit also named their respective affiliated "Group Purchasing Organizations" [GPOs] — started in recent years to negotiate cash rebate payments with drugmakers — known as Zinc Health Services, Ascent Health Services, and Emisar Pharma Services respectively, which they now use primarily for "rebate aggregation".
The FTC's Notice of Contemplated Relief is as follows:
- Prohibit Respondents [the PBMs] from excluding or disadvantaging low Wholesale Acquisition Cost (WAC) versions of high WAC drugs made by the same manufacturers whenever the Respondent covers the high WAC drug on a formulary. In other words, the PBMs would not be permitted to exclude lower-priced versions of insulins such as Lilly's "unbranded" (sold under the generic drug name) insulin called Lilly Insulin Lispro Injection if they put branded Humalog on-formulary. Ditto for any "unbranded" insulins from Novo Nordisk, Winthrop by Sanofi, or Biocon.
- Prohibit Respondents [the PBMs] from accepting compensation based on a drug's list price or a related benchmark.
- Prohibit Respondents [the PBMs] from designing—or assisting with designing—a benefit plan that bases patients' deductibles or coinsurance on the list price, rather than the lower realized "net" cost after rebates.
- Order any other relief appropriate to correct or remedy the Respondents' [the PBMs] violations. This would be using the Courts to ensure these relief efforts to happen.
The FTC press release on its litigation can be viewed at https://www.ftc.gov/legal-library/browse/cases-proceedings/221-0114-caremark-rx-zinc-health-services-et-al-matter-insulin but naturally, the PBM trade organization known as the Pharmaceutical Care Management Association (PCMA) and the individual PBMs countersued the FTC over its legal existence and for "defamation" among other things.
However, the law firm known as Frier Levitt published an update on the status as of December 4, 2024 (see https://www.frierlevitt.com/articles/update-on-ftcs-lawsuit-against-three-largest-pbms-and-their-gpos/ for its write-up). Lawyers suggest the PBM countersuits are likely a possible delay tactic, as well as a message to the FTC that they will litigate to preserve their not-so-little kickback scheme for as long as possible. But the consensus is the PBMs' odds of success are quite poor. This is now essentially a done deal. Bigger companies have tried and failed to fight the FTC. Among them include Standard Oil in 1911 and AT&T in the 1984, but they failed, and the PBMs will likely fail, too.
I did this because the PBM behavior was (at best) on legally questionable ground, or more likely, was overtly criminal and anticompetitive behavior, and more importantly, it was screwing patients and employer healthcare plan sponsors alike out of money we were really entitled to. The laws were on the books for decades, and yet no one was enforcing those laws, so citizens like me helped make it happen. I only wish that some big diabetes advocacy organizations were willing to help me out, but they did not, so we patients were forced to do it on our own.
Again, you are welcome...
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