JUANA SUMMERS, HOST:
When consumers get sticker shock at the pharmacy counter, there is a lot of finger-pointing. Was it the drug company that set the price too high, the insurance company not getting a good deal, someone else? The answer is it's all complicated. But today, the Federal Trade Commission is going after one link in the chain and suing pharmacy benefit managers for artificially inflating the price of insulin. NPR pharmaceuticals correspondent Sydney Lupkin joins us now. Hey, Sydney.
SYDNEY LUPKIN, BYLINE: Hi.
SUMMERS: So Sydney, I mean, people with diabetes who need insulin - they need it to stay alive. And for a long time, it has just been too expensive for a lot of people. I know that your team has even done stories about people who have had to resort to rationing their meds because they couldn't afford proper dosing. Why does the FTC say prices have been so high?
LUPKIN: Well, the government says the middlemen, called pharmacy benefit managers, used a, quote, "perverse" system to favor insulins that cost more because they could make more money from them. When a drug's list price is higher, the PBM can get a bigger chunk of a confidential discount paid by a drugmaker to be on a preferred list for patients. So there's an incentive for a PBM to choose a more expensive drug over a less expensive one. But that can drive up a patient's cost at the pharmacy counter. Overall, the FTC says that practice helped boost the price of insulin 12,000% between 1999 and 2017.
SUMMERS: OK. I just want to back up here for a second and make sure that we all know what a pharmacy benefit manager is. Do we all have one of those?
LUPKIN: So if you have health insurance, yes. Your health insurance hires them, and the FTC calls them medication gatekeepers. The big three are CVS Caremark, Optum RX and Express Scripts. Those three cover 80% of the market, and that's who the FTC is targeting in this legal action. I asked the trade group for PBMs about the FTC's move, and it said the FTC's investigation was biased. PBMs basically negotiate drug prices by determining the menu of drugs your insurance will cover. Their ability to say no is where they get their leverage. But the patient usually doesn't get the benefit of that discount at the pharmacy counter. Here's Dr. Ben Rome of Harvard Medical School.
BEN ROME: We want the lower cost that they're able to extract from the drug manufacturers and that counterweight they provide to drugmakers in setting prices. We just don't want this - we don't want patients to be stuck in the middle between those negotiations and end up paying more.
SUMMERS: So does all of this mean the PBMs are to blame, and the drug companies are off the hook?
LUPKIN: No, it doesn't. The FTC says it is putting all of the drugmakers on notice - not just those making insulin - for being parties to this sort of thing. There are other drugs and drug companies taking part in this same kind of behavior - driving up list prices and profiting while the patients pay more at the pharmacy counter. The blockbuster arthritis drug Humira is another good example, according to an FTC official. And drug companies could be in the crosshairs next.
SUMMERS: Sydney, last question - perhaps the most important one - what does this legal action mean for patients?
LUPKIN: An FTC official told me during a press event that if the PBM suit is successful, it could drive down prices and costs for patients at the pharmacy counter. They're not trying to eliminate PBMs, but they're trying to end this practice that they say primarily enriches PBMs at the expense of regular patients with conditions like diabetes. All that said, lawsuits like this take a long time to play out.
SUMMERS: That was NPR pharmaceuticals correspondent Sydney Lupkin. Sydney, thank you.
LUPKIN: You bet.
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