Caremark Ltd.

A bipartisan group of 39 state attorneys general is calling on congressional leadership to pass a bill that would prohibit PBMs from owning or operating their own pharmacies. The bipartisan letter notes that the top three PBMs — CVS Health’s Caremark, Cigna’s Express Scripts and UnitedHealth Group’s Optum Rx — control 70% of the PBM market and own their own pharmacies, pressuring out smaller pharmacies. The call for major reforms comes as PBMs continue to dominate the pharmacy space and push out independent pharmacies. “PBMs’ position further allows and incentivizes them to provide their affiliated pharmacies with more favorable contract terms, steer consumers away from independent pharmacies to their own affiliated pharmacies, and otherwise engage in tactics aimed at forcing their competition out of business,” according to the letter sent Monday. The push for PBM reform follows stalled congressional action, as a prior bipartisan measure passed the House in late 2023 but did not cross the finish line. More recently, PBM reforms were pulled from an end-of-2024 spending bill, although their bipartisan nature leaves many DC analysts thinking some changes will get done. The attorneys general lay out how PBMs “continue to devour more of the pharmaceutical industry” as Caremark and Express Scripts recently created wholly-owned subsidiary “manufacturers” that market biosimilars to AbbVie’s blockbuster Humira, as they slowly chip away at Humira’s dominance. The letter was signed by AGs from states including Alaska, Arizona, Arkansas, California, Massachusetts, Missouri, Hawaii and Vermont.

The FTC’s legal fight against three major pharmacy benefit managers is on hold after two agency commissioners have been removed by the Trump Administration. The commissioners, Rebecca Slaughter and Alvaro Bedoya, issued two of three votes in favor of bringing an administrative complaint against the PBMs last year, which alleged that “anticompetitive and unfair rebating practices” by the companies led to inflated list prices for insulin products. Caremark, Express Scripts, Optum Rx and affiliated companies known as group purchasing organizations were named in the complaint. Slaughter and Bedoya were terminated by the Trump administration on March 18, according to a motion filed on Monday. As “there are currently no sitting Commissioners able to participate in this matter,” the case has been stayed for at least 105 days, a Tuesday order states . The stay can be lifted “upon motion by one or more of the parties in the proceeding.” Former FTC Chair Lina Khan, the third commissioner to vote in support of issuing the complaint, criticized the stay as “a gift to the PBMs” in a post on X , formerly known as Twitter. Khan left the agency in January. The case was filed under the FTC’s administrative process, as opposed to federal court. The action followed a July interim report from the agency which said that PBMs, acting as the middlemen overseeing drug coverage and reimbursement, “can exercise vast control over huge swaths of the healthcare sector.” The agency expanded on that report with a second publication in early January, before President Donald Trump took office. Melissa Holyoak, one of two FTC commissioners who recused themselves from voting to support the case, bashed the interim report in a dissent last July. Holyoak said the report failed to meet “standards of economic rigor expected of Commission reports more generally,” among other criticisms. An Express Scripts spokesperson praised the stay in a statement to Endpoints News on Wednesday, adding that the case against the company is “legally and factually baseless.” A spokesperson for CVS Health, which owns Caremark, also criticized the case in a separate statement to Endpoints, noting that “the FTC’s internal administrative process would grant the Commissioners the combined role of prosecutor, judge, and jury.” “CVS Health is confident the facts are on our side – drugmakers alone set the price of insulin – and we will continue to defend the case vigorously to protect our ability to make insulin affordable for American businesses and their members,” the spokesperson said. Optum Rx was not immediately available for comment. Slaughter and Bedoya have filed a separate lawsuit in DC federal court alleging that their removal from the commission was unlawful.

A federal judge backed up the US Federal Trade Commission (FTC) this week in its crackdown on pharmacy benefit managers (PBMs). US District Judge John Bates ordered CVS Health and its Caremark unit to comply with the FTC's civil investigative demand to provide business practice records "after months of delays and missed deadlines."The US agency first launched an investigation in 2022 into the impact PBMs have on drug prices and accessibility.In July 2024, the FTC released the results of its work — a scathing report that claimed PBMs have an "outsized influence" on the healthcare industry and wield "significant power" over the affordability of drugs. The report also noted that several PBMs had not provided requested documents, and warned that if they did not comply, the FTC planned to take the companies to district court to compel compliance.It appears the agency has made good on its threat. According to documents filed with the US District Court for Washington, D.C., the FTC filed a petition in January asking the court to order CVS to produce the requested information.Bates sided with the FTC, writing in his opinion that CVS's arguments that complying with the document request "'would be extremely costly, labour intensive, and in certain cases, impossible, do not rise to the level of unduly burdensome."The pharmacy has until the end of the month to hand over its pre-2024 documents; Bates also set a deadline of April 30, 2025 for CVS to procure records created in 2024. The FTC's petition is part of its broader legal action against PBMs. The agency in September sued Caremark, along with Cigna's Express Scripts and UnitedHealth's OptumRx, over their alleged anticompetitive practices that have led to the artificial inflation of insulin prices in the US. The PBM trio's bid for a preliminary injection against that case was rejected by a federal judge in Missouri earlier this month. The FTC also accused Caremark, Express Scripts and OptumRx of systematic price inflation, per a second interim report released in January. The agency claimed that the three firms pocketed about $7.3 billion in excess revenue between 2017 and 2022 through significant price markups at their affiliated pharmacies.