CVS, Cigna, UnitedHealth Sue to Nix FTC Case on Insulin Cost (1)

Units of CVS Health Corp., Cigna Group, and UnitedHealth Group Inc. sued the Federal Trade Commission claiming the agency’s in-house case against the drug middlemen over rising insulin costs is unconstitutional.

The action brought in the US District Court for the Eastern District of Missouri comes weeks after the FTC alleged that large pharmacy benefit managers use illegal rebate programs that raise the price of insulin. It is part of a wave of lawsuits from FTC targets that attack the commission’s proceedings.

The FTC case, which targets CVS’s Caremark, Cigna’s Express Scripts, and UnitedHealth’s Optum Rx, was brought in September in the agency’s administrative court.

The companies’ Tuesday complaint argues, among other things, that the in-house forum violates their due process rights under the Fifth Amendment. The FTC’s claims also involve private rights that must be litigated in federal court, they alleged, citing a June Supreme Court case curbing the Securities and Exchange Commission’s ability to bring cases in its in-house court.

“This sweeping attempt to reshape an entire industry via law enforcement would never pass muster in a US district court,” the lawsuit said. “It is therefore unsurprising that the Commission brought this action in its own captive tribunal.”

‘It Will Not Work’

The FTC’s administrative action targets what it has called anticompetitive practices that shift increasing costs onto patients. Caremark, Express Scripts, and Optum Rx, which control about 80% of prescriptions filed in the US, accepted money from drugmakers in exchange for keeping lower-cost insulin off their lists of approved drugs, according to the FTC.

The pharmacy benefit managers, which manage prescription drug plans for employers and government programs, maintain that their programs protect Americans from higher drug prices.

“It has become fashionable for corporate giants to argue that a 110-year-old federal agency is unconstitutional to distract from business practices that we allege, in the case of PBMS, harm sick patients by forcing them to pay huge sums for life saving medicine,” FTC spokesman Douglas Farrar said in a statement. “It will not work.”

The lawsuit further escalates a fight between the Biden administration and the large pharmacy benefit managers. Express Scripts previously asked the same Missouri federal court to order the FTC to retract what it called a “defamatory” report that presaged the agency’s legal action.

In the latest lawsuit, Express Scripts and others seek to undercut a key forum that the FTC uses to litigate conduct cases and matters involving corporate mergers.

The defendants also take aim at a 1935 Supreme Court opinion, Humphrey’s Executor v. United States, shielding FTC commissioners and administrative law judges from presidential removal. They PBMs claim that decision should no longer apply to an agency that has evolved into one with executive functions.

In addition to seeking a pause to the in-house case, the lawsuit requests a declaration that FTC commissioners are unconstitutionally insulated from dismissal, which it says would render the in-house case unlawful.

Express Scripts is represented by firms including WilmerHale and Rule Garza Howley LLP. Caremark is represented by Williams & Connolly LLP and Dechert LLP. Optum Rx is represented by Gibson, Dunn & Crutcher LLP.

The case is Express Scripts Inc. v. FTC, E.D. Mo., 4:24-cv-01549, 11/19/24