1. Introduction
In the United States, some 8.4 million people rely on insulin for survival, a drug that has existed for over a century and once cost only $21 per vial. Yet, since about 2012, insulin prices have soared by more than 1,200% in some cases, causing consumers—especially diabetic patients with high deductibles or coinsurance—to face shocking out-of-pocket expenses. Some ration their doses. Some forego meals to afford their medication. Others, tragically, face long-term health complications or even death when they run out of money to pay for essential refills.
This modern-day calamity—ensuring that life-saving drugs are unaffordable to many who need them—lies at the core of an FTC complaint filed in September 2024 against the three largest pharmacy benefit managers (PBMs) in the country, along with a set of affiliated group purchasing organizations (GPOs).
PBMs are powerful intermediaries that stand between insurance plans, drug manufacturers, pharmacies, and ultimately, patients. According to the FTC’s complaint, three behemoth PBMs—Caremark, Express Scripts, and Optum—process nearly 80% of all U.S. prescriptions, giving them unparalleled leverage to dictate which drugs are “preferred” on insurance formularies, which drugs are excluded altogether, and how much final reimbursement manufacturers must pay back in the form of rebates and fees. The most damning evidence in the FTC complaint involves insulin.
These PBMs not only extracted ever-larger rebates from the insulin makers, but they also incentivized manufacturers to keep list prices high—hurting individuals who pay out-of-pocket costs calculated on that inflated, “unrebated” list price.
The result is a manifestation of the neoliberal capitalism dynamic that shapes America’s healthcare system. The FTC’s allegations paint a picture of corporate greed eclipsing corporate social responsibility, with the vulnerable—diabetic patients—stuck in the middle. Under a functioning health insurance model, the healthy subsidize the sick. But in this scenario, out-of-pocket obligations tied to the artificially inflated list price force diabetics to shoulder an outsized share of costs, effectively flipping the usual subsidy principle on its head.
PBM–GPO arrangement has systematically blocked or disadvantaged lower-cost alternatives. When drug companies tried to introduce identical “unbranded” insulin at lower list prices, or launched new biosimilars priced more affordably, these same PBMs allegedly kept such products off their most-commonly-used formularies in order to preserve lucrative rebate revenue.
One must place this investigation into insulin prices in a broader context: Americans pay roughly three times as much for prescription drugs as consumers in other countries, fueling a wealth disparity between corporate bottom lines and the public’s financial well-being. Critics see this as a feature, not a bug of the healthcare system under neoliberal capitalism. They point to regulatory capture—where agencies move slowly or stay hands-off while “market solutions” have failed to protect the public.
This article unfolds in eight sections, drilling down into how the PBMs allegedly orchestrated these high price–high rebate schemes, how they profit from them, and how regulators, until recently, stood by as these practices spread. By delving into the corporate intent, the playbook, and the systemic failures that made these price maneuvers possible, we’ll uncover why corporate accountability remains elusive. We also examine the public relations tactics used to soothe public anger, and the final section takes a step back to weigh the public interest in the face of consolidated corporate power.
Ultimately, this story raises the unsettling possibility that the U.S. prescription drug crisis—exemplified so painfully by unaffordable insulin—may not be a “mistake” but an outgrowth of a profit-maximizing environment wherein corporate corruption can thrive. It also raises pressing questions about how we might redirect the system to genuinely center on consumers’ advocacy and health equity.
2. Corporate Intent Exposed
Was there a deliberate plan among pharmacy benefit managers and their GPO affiliates to inflate list prices, especially for widely used essential medications like insulin? Or was this merely a byproduct of standard market competition?
The official complaint suggests a calculated strategy that went well beyond typical commercial rivalry. As soon as the “big three” PBMs recognized that their leverage over drug manufacturers had grown—thanks to industry consolidation—they introduced exclusionary formularies, which refused coverage for certain drugs unless manufacturers offered bigger and bigger rebates. This effectively turned the concept of competition on its head: instead of manufacturers winning market share by lowering list prices, the PBMs demanded that manufacturers raise list prices, then pay a percentage of that higher price back to the PBM in rebates.
Exclusion as a Corporate Weapon
In a normal free market, if two products treat the same condition, competition drives down prices. Yet, as laid out in the complaint, starting around 2012, PBMs introduced so-called “closed” formularies, excluding multiple drugs in the same category. The excluded product risked losing access to tens of millions of patients covered by that plan, a financial death sentence for the drug. Confronted with the threat of total exclusion, manufacturers were willing to pay steeper rebates to remain “preferred” on the PBM’s formulary.
The intent becomes clear through internal references to how PBMs structured these “pay-to-play” deals. For instance, the complaint describes how these corporate entities reconfigured their business around the idea that higher list prices fetch higher rebates, which PBMs partially pass on to their client health plans, and partially keep for themselves in the form of various fees. Allegedly, the PBMs also set up GPO affiliates—such as Ascent, Zinc, and Emisar—to negotiate these deals in ways that disguise the actual pass-through rate to payers, thus deepening the overall profiteering.
The Apparent Knowledge of Patient Harm
A key piece of evidence regarding intent lies in the PBMs’ alleged awareness that certain patients—those without insurance or those with coinsurance and high deductibles—would pay out-of-pocket costs based on list price, not the lower, rebated price. According to the FTC’s complaint, PBMs not only failed to pass the rebates through to these patients, they also rejected lower-priced alternatives that would have slashed out-of-pocket expenses at the pharmacy counter.
One chilling aspect is that PBM and manufacturer executives alike appear (per the allegations) to have acknowledged the burden on patients, with their own internal documents referencing how many patients ration insulin or suffer adverse events due to cost. Nonetheless, the chase for higher rebates did not relent.
Creating a Perverse Incentive Under Neoliberal Capitalism
The legal complaint reveals the profit-maximizing logic of these PBMs. Any direct cut to the list price of a commonly used drug—like insulin—would reduce the size of the percentage-based rebates and fees. Put simply, with a 20–30% rebate pegged to a product’s “Wholesale Acquisition Cost” (WAC), a $10 price cut on the list side translates to a commensurate reduction in PBM revenue. In an environment shaped by neoliberal capitalism, it appears that no one wanted to see that revenue stream dwindle.
Wholesale Acquisition Costs is the cost that drug manufacturers sell to wholesalers– so they’re basically the sticker price of prescription medicine. As such, they’re used as a starting point in pricing negotiations and they’re also used in rebate/ reimbursement calculations. For example, there might be a contract that specifies that the reimbursement for insulin will be priced at “WAC minus X%”.
The losers here are the most vulnerable patients. Far from the healthy-subsidy principle that underlies standard insurance models, sick patients with insulin-dependent diabetes ended up subsidizing healthy plan members and PBM profits—paying more because their cost-share was pegged to the artificially inflated price.
The complaint cites one instance in which a patient’s coinsurance payment for insulin actually exceeded the net cost of the drug to the insurer and the PBM, allowing them to come out ahead financially.
“List Price Parity” and Coordinated Price Spikes
This is how insulin manufacturers found themselves locked into “list price parity,” repeatedly raising prices to remain attractive to PBMs. Competitors like Eli Lilly and Novo Nordisk matched each other’s insulin price hikes to “keep up” with rebate demands from the PBMs. This suggests not merely accidental parallel behavior, but an industry culture in which corporate ethics bowed to the pursuit of short-term financial gain.
Taken collectively, these facts constitute more than just a single bad actor or a handful of mistakes. They depict a coordinated push to prioritize profits at any social cost, an example of how corporate accountability can stall when large conglomerates use their size and complexity to mask questionable practices.
3. The Corporate Playbook / How They Got Away with It
To understand how PBMs “got away with it” for so long, we must examine what the corporate playbook looks like in a consolidated, vertically integrated industry:
- Massive Mergers and Vertical Integration
Over the last two decades, the three PBMs named have merged with or acquired multiple other PBMs, gradually centralizing control. Each also integrated vertically, pairing with large health insurers (e.g., Cigna with Express Scripts; CVS with Caremark/Aetna; UnitedHealth Group with Optum) and sometimes owning pharmacy chains, mail-order distribution systems, and separate GPOs. This gave each PBM a near-monopoly in its piece of the system—Caremark processes 34% of U.S. prescriptions, Express Scripts 23%, and Optum 22%. Such scale, according to the complaint, grants them the power to threaten drug makers with blanket exclusion if their demands are not met, effectively setting the stage for big rebates. - Exclusionary Formularies
Once a PBM established near-captive audiences of millions of insured members, it replaced broad coverage with “closed” formularies. A drug not on the PBM’s preferred list faced drastically lower sales. Drug makers, in response, engaged in a “race for rebates” to avoid total exclusion. Over time, this drastically inflated list prices—as high as 1,200% in the case of insulin. - Rebate Maximization Through Hidden GPOs
According to the FTC’s complaint, each PBM spun off or created a group purchasing organization (GPO): Caremark’s Zinc, Express Scripts’ Ascent, and Optum’s Emisar. These GPOs took over the commercial rebate contracting from the PBM, effectively walling off the negotiations and creating a more opaque structure. The complaint suggests the PBMs designed these GPOs to obscure how much in rebates and fees they actually retained versus how much they passed back to plan sponsors. By pegging administrative fees, data fees, and other charges to the list price, PBMs ensured that as the list price rose, their GPO arms made more money—even if they were providing no additional services. - Keeping Clients in the Dark
The complaint underscores how employers, unions, and other plan sponsors usually know only the overall, aggregated rebate figures, not the drug-level detail. This lack of transparency prevented them from fully grasping how the PBMs’ quest for maximum rebates, ironically, might be driving up list prices and harming employees who use costlier drugs. The GPO arrangement was partly designed to confound auditing efforts; the GPO’s fees often sit outside the direct PBM–employer contract, shielding them from scrutiny. - Selling “High Rebate” Metrics to Attract More Business
The complaint alleges that PBMs tout their large “guaranteed rebate amounts” to prospective client plans—framing bigger rebate totals as a plus, even though that bigger total might stem from inflated list prices. Many plan sponsors, lacking specialized knowledge or resources, believed a “bigger rebate check” implied a better deal. Meanwhile, employees reliant on insulin paid ever more out of pocket at the pharmacy. - Excluding Low-WAC Products
When manufacturers tried to remedy the situation by introducing lower list price (low-WAC) insulin or new biosimilars, they were locked out of the major formularies by the PBMs unless they offered similarly large rebates. Over and over, the complaint points to near-identical products with drastically different list prices—only the “high WAC” version got formulary coverage.
Corporate Culture of Silence
A hallmark of the corporate playbook is that each piece of the puzzle is justified internally as “standard industry practice.” But when aggregated, it results in a labyrinth that benefits only a few corporate actors. The complaint suggests that, from the perspective of PBMs, the secrecy of negotiations is not a bug, but part of the design—hiding net costs behind complicated rebate and fee structures ensures that plan sponsors cannot easily compare or pressure the PBM to pick the genuinely more affordable medication at the point of sale.
Historical Industry Norms (General Context)
Historically, when similar lawsuits or investigations have targeted large corporate intermediaries in the healthcare space, a consistent theme emerges: regulatory capture and limited public transparency often allow these intermediaries to maintain complicated pricing systems that maximize their revenue streams. The PBMs in this complaint are to have leveraged just such a system, perfecting the “exclusion–rebate–fee” cycle to push costs onto a captive patient population.
4. Crime Pays / The Corporate Profit Equation
If one phrase sums up this aspect of the FTC’s complaint, it is that “crime pays”—or more precisely, these anticompetitive and unfair methods paid off handsomely for the PBM respondents. In purely economic terms, the complaint contends that the net effect of these practices was billions of dollars in rebates and fees flowing from drug manufacturers to the PBMs and their GPO affiliates. Meanwhile, no additional value was being provided to patients or plan sponsors.
Dissecting the Profit Model
- Higher List Price ⟹ Higher WAC-Based Fees
The complaint notes that fees assessed by the PBM or GPO on drug manufacturers were often set as a percentage of the drug’s Wholesale Acquisition Cost (WAC). A 1% fee on a $300 product is obviously bigger than 1% on a $100 product. This structure motivated the PBMs to favor high WAC drugs, since each transaction yielded larger fees. - Manufacturer Rebates Tied to “Exclusive” Placement
When a PBM designates a drug as its “exclusive” option for treating a condition—such as diabetes—it can demand a more generous rebate from the manufacturer, sometimes reaching 75% or more of the list price. If the PBM excludes all competing products, a single manufacturer can dominate that PBM’s entire coverage network, further justifying higher rebates. - Pass-Through or Not?
While PBMs often claim they pass through “95–98%” of all rebates to plan sponsors, many question that figure. Citing data from the Texas Department of Insurance, the complaint points out that PBMs and GPOs often keep a significant chunk of total manufacturer payments in the form of fees, retained rebates, and other charges. Although plan sponsors get some portion of these rebates, they often do not share them directly with the patients who generated the rebate through their prescriptions. Instead, plan sponsors may use the rebates to offset overall premiums or deposit them into general funds—a best-case scenario. In other situations, the complaint alleges, the PBMs or plan sponsors simply keep them as revenue. - Excessive Out-of-Pocket Costs as Revenue “Upside”
For patients with coinsurance or in the deductible phase, higher list prices can mean paying $50, $100, or more per refill out of pocket. In some instances, a patient’s payment can exceed the net cost of the medication to the plan—effectively “zeroing out” or even creating a net margin for the insurer or PBM each time a patient fills a life-saving prescription. That cost disparity underscores how “crime pays” in the scheme: the PBM reaps bigger fees because the list price is larger, the manufacturer maintains market access through big rebates, and the plan sponsor might even make a small profit on certain prescriptions. The only party losing is the diabetic patient shelling out 20%, 30%, or 100% of an artificially high WAC-based price.
The Social and Economic Fallout
The economic fallout from such profit-driven schemes does not simply impact the wallets of diabetic patients. It also increases the burden on emergency rooms and public health systems. Individuals who cannot afford consistent insulin therapy risk acute complications like diabetic ketoacidosis, leading to hospitalization or worse. The complaint highlights how these preventable hospital stays drive up overall healthcare costs, ironically feeding back into the insurance system and, ultimately, into premiums for everyone.
Reinforcing Market Consolidation
The complaint suggests that, ironically, these large PBMs used the resulting high rebate numbers to tout themselves as the best option for plan sponsors. By guaranteeing bigger “minimum rebates” to prospective clients, PBMs could outcompete smaller rivals lacking the same scale. This “crime pays” loop fosters further consolidation, as smaller PBMs either adapt the same strategy or vanish.
No Additional Value
One of the most eye-opening revelations is that the PBMs and GPOs often provide no additional services to justify these big fees. Administrative tasks such as claims processing or formulary design presumably cost no more to manage if the WAC is $100 versus $300. Yet the PBMs would still collect a percentage-based fee that soared with the drug’s list price. This system is, the complaint implies, untethered to actual costs but deeply tied to their profit model.
Essentially, this is a near-perfect example of corporate greed: raking in revenue by inflating a drug’s sticker price while simultaneously presenting themselves as cost-saving champions to clients. And, as the next sections will show, regulators until recently did little to stop it.
5. System Failure / Why Regulators Did Nothing
Why, in a nation with sprawling regulatory agencies and potent federal statutes, did these practices flourish for so long? Why did state or federal overseers not step in earlier if the negative impacts were so widespread?
- Complexity of the PBM Model
PBMs gained prominence several decades ago as simple claims processors, largely flying under the public’s radar. Over time, their roles ballooned to include formulary design, rebate negotiation, and pharmacy network management. This happened without many well-defined, unified regulations. Even many within government found it difficult to keep track of PBM operations, especially as vertical integration blurred lines between insurers, PBMs, pharmacies, and GPOs. - “Market Solutions” Under Neoliberal Capitalism
In the broader context of neoliberal capitalism, U.S. healthcare has often relied on “private market solutions” in lieu of direct price regulation. PBMs self-presented as cost-controlling heroes who reduce drug spending for health plans. In practice, as the complaint contends, PBMs excelled at negotiating big rebates—but did not actually lower net prices for many patients in ways that matter at the pharmacy counter. Regulators, often grappling with limited resources or deference to the private sector, did not impose direct scrutiny on the behind-the-scenes mechanics of rebate structures or the reasons for skyrocketing list prices. - 50-State Patchwork
Pharmaceutical pricing can cross lines of federal and state authority. Some states have tried to pass PBM reform bills or transparency laws, but enforcement is uneven. The complaint specifically references how data from the Texas Department of Insurance shined a spotlight on hidden retained fees, but that such transparency is far from universal. - Regulatory Capture and Lobbying
Though not fully detailed in the complaint, critics of the pharmaceutical supply chain highlight intense lobbying from the healthcare and pharmacy sectors. PBMs, consolidated and flush with capital, have arguably spent significant resources to shape policy debates. This phenomenon is often described as regulatory capture, where agencies or legislative processes end up advancing the industry’s interests rather than the public’s. - Reluctance to Intervene in “Free-Market” Negotiations
The Supreme Court has long recognized the federal government’s authority to regulate certain aspects of drug pricing. Yet, historically, laws like the Robinson-Patman Act or antitrust statutes have been used sparingly for prescription drug negotiations. PBMs capitalized on the system’s structural preference for letting private negotiators handle drug pricing—under the assumption that “competition” would bring down costs. Given that public attention was often fixated on manufacturers, many people assumed that “if insulin is expensive, blame Big Pharma.” Meanwhile, the PBMs largely evaded scrutiny—until rising outcry over insulin’s “rebate trap” spurred official investigations by the FTC and others.
The FTC’s Change of Tack
Over the last several years, under public and congressional pressure, the FTC ramped up scrutiny of PBMs. The complaint in question is arguably a culmination of that pivot. If proven, it marks a strong statement that at least some regulators now see the entire “high list price, high rebate” mechanism not as a glitch, but as a potential violation of the Federal Trade Commission Act and an unfair method of competition.
Nonetheless, the FTC indicates that the alleged wrongdoing has gone on for years, if not a decade. Which naturally raises the question: how could a small group of consolidated intermediaries shape the market so drastically, overshadowing the public’s need for accessible medication? If the deeply vulnerable state of insulin affordability can persist for so long, what does that say about the rest of the pharmaceutical landscape?
The Cost of Delay
The systemic inertia also underscores that delayed regulation can make problems worse. Thousands—if not millions—of individuals with Type 1 or Type 2 diabetes confronted staggering cost burdens year after year, long before the FTC stepped in. The complaint references Americans spending $722 billion on prescription drugs in 2023—nearly as much as the rest of the world combined. Some portion of that staggering figure, the FTC now suggests, may stem from the artificially inflated list prices championed by the PBMs’ “rebate scheme.”
In short, regulators did nothing (or did too little, too late) because the PBM business model was obscure, integrated with big insurance, shielded by PR that labeled them the “good guys,” and allowed to flourish under a “market knows best” approach that rarely confronts the inherent conflicts of interest in a for-profit healthcare system.
6. This Pattern of Predation Is a Feature, Not a Bug
Throughout the FTC complaint, one recurring theme emerges: the fundamental approach of these PBMs—preferring high list prices and excluding cheaper alternatives—seems deliberate, not accidental. Looking at it from a neoliberal capitalism lens, we see how the alleged “predatory” arrangement is consistent with a system that prizes shareholder value above all else.
Reinforcing Profitable Status Quo
When insulin makers attempted to introduce “low WAC” versions at half the price, they were effectively rebuffed if they did not pay the same “high-dollar rebates.” As soon as a low-priced product offered fewer absolute rebate dollars, the PBM, the complaint contends, would exclude it from coverage. Over time, manufacturers learned that to maintain coverage, they had to keep raising list prices (thus raising rebate totals), preventing cheaper alternatives from challenging the existing model.
The “Addiction to Rebates”
Multiple manufacturer statements referenced in the complaint use the expression “addiction to rebates.” This can be read metaphorically: once you build a profit model around a constant flow of large rebates, it becomes very difficult to pivot. If you reduce list prices and reduce your rebate outlays, you might lose formulary position, or your PBM partner might “fail” to meet its guaranteed rebate obligations to plan sponsors.
In effect, the industry is stuck in a loop:
- PBMs want bigger total rebates (for themselves and their clients).
- Manufacturers must hike list prices to afford paying those rebates while maintaining their own net margins.
- Patients with cost-sharing pegged to list price pay more.
In a well-functioning insurance model, we would see downward pressure on drug prices from PBMs. Instead, the complaint underscores that these large, consolidated PBMs had the opposite effect.
Disparities and the Dangers to Public Health
This system created a distinct wealth disparity between corporate earnings and the financial struggles of the uninsured or under-insured. Many uninsured patients pay the full list price for insulin at the pharmacy. Meanwhile, the complaint details that even insured individuals in high-deductible plans ended up paying hundreds of dollars per prescription. It is no coincidence that insulin rationing spiked, with some data showing 1 in 4 people with diabetes not taking their recommended insulin dose due to cost.
The dangers to public health are dire. Diabetic ketoacidosis can lead to hospitalization, coma, or death if patients cannot manage their insulin dosage properly. As the complaint reveals, PBMs were not blind to these consequences; they simply demanded more rebates.
Parallels in Other Industries
Comparable patterns have surfaced historically in other corners of corporate corruption: controlling gatekeeper positions in essential goods and funneling profits upward by restricting lower-cost entry. For instance, in certain energy markets or agricultural supply chains, dominant wholesalers have similarly demanded “rebates” from farmers or producers that indirectly inflate retail prices. While the specifics differ, the systemic reliance on high markups as a revenue source is reminiscent of the practices done here.
Given the sums at stake—$722 billion in total U.S. prescription drug spending—the complaint draws sharp focus on insulin as the “poster child,” but hints that the same “rebate chasing” may occur with other essential medications, particularly for chronic illnesses.
Willingness to Tolerate Harmful Outcomes
Perhaps the most troubling dimension is the tolerance for harmful outcomes embedded in the system. Even as negative news stories circulated about Americans dying after rationing insulin, the complaint alleges that the PBMs kept introducing new layers of GPO complexity and forging relationships that continued to prioritize rebates.
In other words, the “pattern of predation” is not a one-off glitch; it’s arguably the default setting in an unregulated or lightly regulated environment that prizes profit. Only when public outrage and political pressure mounted—propelled by horrifying personal stories—did regulators begin to respond.
7. The PR Playbook of Damage Control
Whenever public outrage over skyrocketing insulin prices reaches a boiling point, the major corporate players—PBMs, drug manufacturers, and insurers—engage in a tried-and-true PR playbook. While the specifics vary by company, the complaint and historical examples illuminate key tactics:
- Finger-Pointing
PBMs are quick to blame manufacturers: “If insulin is expensive, blame Big Pharma for setting the list price.” Manufacturers pivot and say: “We only raise list prices because PBMs demand higher rebates.” Health plans deflect by saying: “We’re passing on cost-savings to members.” In the end, each tries to pin the blame on someone else, muddying the waters so the average consumer cannot see a clear cause or solution. - Safe But Narrow “Patient Assistance” Programs
The complaint references how PBMs (and sometimes drug makers) tout special assistance programs. These might cap monthly insulin costs at $35 or $25 for “qualified patients.” Yet, the scale of these programs is often limited, or they come with eligibility requirements that exclude many middle-income or uninsured individuals. The FTC complaint strongly suggests these assistance programs are far from universal solutions; indeed, the bulk of commercial plans do not adopt point-of-sale rebates or cost-capping for insulin. Meanwhile, the PR messaging around them is used to highlight compassion and deflect broader calls for accountability. - Cherry-Picked Statistics
Corporate communications might showcase how certain plan members have “virtually no co-pays” or how PBMs “save billions” for plan sponsors. However, these aggregated or selective figures may ignore the subset of high-deductible or uninsured individuals paying extreme amounts out of pocket. - Lobbying and Public Relations Firms
Behind the scenes, the complaint implies an extensive lobbying framework that fosters a favorable regulatory environment. PBMs publicly trumpet the line, “We keep costs down,” relying on general confusion around drug-pricing mechanics to continue operating with minimal scrutiny. - Quietly Offering Alternative Formularies
PBMs sometimes say, “We have a more open formulary or a point-of-sale rebate option.” True as that may be, the complaint indicates these “alternative” or “custom” approaches are rarely chosen or fully embraced because they produce smaller rebate totals for the health plan or require more plan sponsor knowledge and engagement. Some payers may not even know such options exist, or if they do, PBMs note it could reduce the large guaranteed rebate check. - Framing High Rebates as a Victory
Finally, the complaint underscores that PBMs tout big rebate numbers as proof of cost savings for clients. This PR line appeals to large employers and plan sponsors, who might assume it means their total drug spending is lower, even when employees get hammered by out-of-pocket costs at the counter.
The Gap Between Words and Action
All told, the PR statements from PBMs often revolve around corporate social responsibility—claiming to fight for lower drug costs. But the complaint reveals a fundamental mismatch between those statements and the alleged behind-the-scenes practices that keep list prices high.
Damage Control and the Fear of Real Reform
A final dimension is the PBMs’ recurring claim that any major changes to the rebate system would “disrupt the market” and potentially increase premiums. In times of public scrutiny, PBMs have historically leveraged the complicated nature of pharmacy benefits to argue that “If we abolish rebates, your monthly premiums might skyrocket!”
However, the complaint points to the reality that it is high list prices that primarily hurt the chronic-condition patients. Meanwhile, the PBMs continue to thrive financially. This dynamic fosters cynicism about whether the “system is too big to fix,” an idea that further staves off meaningful policy intervention.
8. Corporate Power vs. Public Interest
Insulin is a vital lifeline for millions. The exorbitant prices are, life-or-death matters for many patients. The broader question, which resonates well beyond insulin, is whether the U.S. healthcare system can truly protect the public interest—or if corporate power has become too entrenched to meaningfully reform.
A Tipping Point for Corporate Accountability?
The FTC’s complaint suggests that regulators have finally drawn a line, charging that the orchestrated PBM–GPO system violates Section 5 of the FTC Act by unfairly inflating drug prices and harming consumers. If these claims hold up, it may set a precedent that the “high list price, high rebate” model for drug pricing is no longer acceptable.
However, in practice, large corporate entities often negotiate settlements without admitting wrongdoing, pay fines that represent a fraction of their revenue, and continue forward with minimal changes to their core practices. Past events in other sectors—like finance or environmental pollution cases—show how even large fines might be treated as a cost of doing business rather than a true deterrent. Observers of corporate ethics thus remain skeptical, questioning whether PBMs will fundamentally overhaul their approach if it negatively impacts their profits.
The Risk of Piecemeal Reform
Even if the FTC’s proceeding leads to new rules (such as forbidding PBMs from excluding lower-WAC versions of drugs when the same manufacturer produces them), the underlying structures of secrecy, vertical integration, and reliance on big rebates may linger. A plan sponsor might still prefer to see the biggest possible rebate check, and the PBM might continue obscuring net costs behind complicated deals.
Without systemic reform—one that addresses how out-of-pocket costs are calculated, how rebates are structured, and how net price transparency is enforced—any short-term fix could be circumvented by a new tactic or a different fee arrangement.
Consequences for Local Communities and Workers
When insulin and other essential medications become unaffordable, the ripple effects are felt most acutely at the local level:
- Health outcomes deteriorate, leading to higher rates of diabetes complications, lost productivity, and emotional distress.
- Hospitals, especially in low-income communities, bear the cost of emergency care for patients who arrive with advanced conditions after rationing their medication.
- Employers face workers calling out sick more often or using disability leaves, potentially pushing up health plan costs in the long run.
All of these factors compound wealth disparity: individuals already facing financial strain due to wages failing to keep pace with inflation must spend hundreds more each month on prescription copays or coinsurance. That money is diverted from local economies, savings, and wealth-building.
Grassroots Pressure and Hope for Change
The massive outrage over insulin has galvanized patient-led movements, consumer advocacy groups, and certain elected officials. Indeed, it was consumer voices—parents who lost children to insulin rationing, families forced to choose between rent and medicine—that pressured the FTC to focus on PBMs.
If public awareness continues to grow, it might open the path for:
- Transparent pass-through of rebates at the point of sale, ensuring patients pay closer to the net price.
- Mandatory coverage of at least one true low-WAC insulin in each PBM’s flagship formulary, guaranteeing patients an affordable option.
- Stricter federal and state oversight, requiring PBMs to disclose net costs to plan sponsors and restricting the use of WAC-based fees.
A Broader Reckoning with Neoliberal Capitalism
The question of corporate power vs. public interest cannot be divorced from the broader reality of neoliberal capitalism. In an environment that prioritizes profit maximization and relies on minimal regulatory intervention, it is unsurprising that an essential medicine like insulin became a flashpoint. The tragedy is that individuals with chronic illnesses have no choice but to pay whatever the system demands—or risk immediate health crises.
This structural dynamic, left unchecked, perpetuates a cycle where corporate corruption can flourish, and corporate greed overshadows corporate social responsibility. Those same structural incentives might continue to replicate themselves with other classes of drugs. For all the talk of “free markets,” we see an extremely concentrated oligopoly with the power to effectively set or shape essential drug prices.
Where Does the Public Interest Stand?
Beyond insulin, this FTC action signals that the status quo—rife with wealth disparity and dangers to public health—may be indefensible. True reform would require not only a strong legal framework but also a cultural shift in how we measure success in healthcare. Until then, the best that consumers can do is stay informed, support advocacy groups pushing for transparency and fairness, and remain watchful. For it is only with sustained public pressure that corporations may be held accountable and forced to put public interest on par with, or above, their profit imperatives.
At least on the issue of PBMs, I remain cautiously optimistic.
sources:
https://www.ftc.gov/system/files/ftc_gov/pdf/611919.2024.10.09_optum_rxs_answer_to_complaint_0.pdf
an FTC chair (Lina Kahn) made remarks on this story too:
https://www.ftc.gov/system/files/ftc_gov/pdf/statement-of-chair-khan-re-cid-enforcement-01.17.25.pdf
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