OptumRx, the group’s pharmacy benefit manager, along with its two main peers, Express Scripts and CVS Caremark Rx, have pocketed an extra $7.3 billion over cost thanks to price gouging, according to the findings of a report by the Federal Trade Commission. CVS Caremark Rx blasted the findings for cherry picking certain drugs in an effort to push what it called an ‘anti-PBM’ narrative.
UnitedHealth Group is charging patients a markup for key life-saving drugs that could easily exceed their cost by a factor of ten or more, according to findings from the Federal Trade Commission.
The report, which levels the same allegations at CVS and Cigna, is the latest indictment of America’s broken healthcare system and comes on the heels of last month’s shocking murder of UnitedHealthcare CEO Brian Thompson.
The U.S. is notorious for incurring the highest costs per capita of any wealthy nation, yet failing to achieve an even remotely equivalent improvement in patient outcomes versus Europe’s social market-based economies.
Critics argue that is due largely to the highly opaque manner in which needless markups are hidden to conceal inefficiencies that serve various vested interests. These include, but are not limited to, the big three drug middlemen known as pharmacy benefit managers (PBMs).
According to the FTC report, UnitedHealth’s OptumRx, along with Cigna’s Express Scripts and CVS Caremark Rx, were able to collectively pocket $7.3 billion in added revenue above cost during the five year period of the study through 2022.
“The Big 3 PBMs marked up numerous specialty generic drugs dispensed at their affiliated pharmacies by thousands of percent, and many others by hundreds of percent,” it concluded.
A thousand percent increase in the price of a drug that costs $10 wholesale would result in a retail price of $110.
This markup rate applied to 22% of the specialty therapies examined, including Imatinib, a generic used to treat leukemia, or non-oncological Tadalafil for pulmonary hypertension. Others such as Lamivudine needed by HIV-positive patients were nearly quadruple the price of their acquisition cost.
Independent Vermont Sen. Bernie Sanders has been conducting Congressional hearings in an attempt to shed light on the problems posed by these drug middlemen as well as drugmakers themselves.
UnitedHealth Group in headlines for all the wrong reasons
The accused killer of Brian Thompson cited the industry’s failures as his motive for assassinating the UnitedHealth executive on the streets of New York. Luigi Mangione ended up receiving an outpouring of support on social media from Americans furious how the Minnesota-based company mistreated their loved ones.
The business that was managed by Thompson, the group’s insurance arm United Healthcare, had denied twice as many claims as the industry average, according to figures from comparison site ValuePenguin.
Just this month, surgeon Elisabeth Potter recounted how she was in the midst of operating on a breast cancer patient when an urgent call came in from United Healthcare demanding proof the procedure was in fact justified.
“It’s out of control,” she said in a video uploaded to TikTok, “insurance is out of control.”
The findings levelled at the three big PBMs stem from a report carried out under the leadership of outgoing FTC chair Lina Khan. She has been a frequent target of criticism due to her robust approach to investigating monopolies and waging battle with Big Tech, earning her the ire of major figures in Silicon Valley on both sides of the political divide.
Importantly, all five FTC commissioners signed off on the release of the report. This includes Andrew Ferguson, Khan’s designated replacement under Trump, as well as his fellow Republican, Melissa Holyoak.
Cherry picking data to push an ‘anti-PBM’ narrative
UnitedHealth’s OptumRx told Fortune it is still reviewing the specifics of the report, but the PBM said it helped eligible patients save $1.3 billion in costs, estimating the median out-of-pocket payment to be $5.
“Optum is lowering the cost of specialty medications, which comprises half of all drug expenditures, and providing clinical expertise, programs and support for patients with complex and rare conditions,” it said.
CVS Caremark, by comparison, argued the FTC was guilty of “cherry picking” its analysis by focusing on generics, which represent a tiny fraction of client spending over branded specialty drugs in an attempt to mislead. It, too, said it was saving clients money: out-of-pocket costs have dropped seven straight years for a total reduction of 29% since 2016.
“If we’re going to have an investigation like this, the American people deserve to see the complete story based on all the facts and not just those that support a predetermined narrative,” it countered in a statement to Fortune. “The ‘anti-PBM’ policies the FTC is currently pursuing would only increase U.S. drug costs for American patients, employers, unions, and taxpayers.”
Branded drugs, however, bear substantial risk as they are unproven and highly risky endeavors that can take years of experimental trials before they can achieve a return on investment—assuming they ever do at all. By comparison, generic versions of off-patent drugs only cost the materials needed to produce them and enjoy an already built-in market with regulatory approval.
Cigna, parent of Express Scripts, did not respond to a request for comment.
