The Federal Trade Commission (FTC) is facing legal challenges from three competing pharmacy-benefit managers (PBMs) over its attempt to restrict their ability to negotiate drug prices for health plan sponsors.

In September, the FTC filed a formal complaint against three major pharmacy benefit managers (PBMs)—CVS Health Inc’s (NYSE:CVS) Caremark, Cigna Corp’s (NYSE:CI), Express Scripts, and UnitedHealth Group Inc’s (NYSE:UNH) Optum—for allegedly engaging in unfair and anti-competitive practices that have inflated the list price of insulin medications.

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The complaint accuses the PBMs of creating a system that benefits them financially by prioritizing drug rebates, forcing patients to pay higher costs for life-saving insulin. These PBMs, referred to as the Big Three, administer around 80% of prescriptions in the U.S.

The PBMs argue that this action seeks to upend current drug rebate contracts and disrupt long-standing practices, all while expanding the FTC’s authority beyond traditional limits.

The companies also contend that the administrative proceeding violates constitutional principles by lacking independent judicial oversight and claim that the FTC’s approach could result in significant and irreparable injury.

The lawsuit stems from the FTC’s attempt to regulate the drug rebate system, allowing PBMs to secure manufacturers’ discounts.

However, the FTC’s complaint accuses the PBMs of using their power to create an unfair market, alleging that the system allows drug manufacturers to inflate prices.

In challenging the FTC’s action, the PBMs argue that this is not just a market dispute but a constitutional issue.

They assert that the FTC’s administrative proceeding, taking place in an in-house forum where the agency decides the facts, the law, and the outcome, is unconstitutional.

Furthermore, the PBMs argue that the FTC’s decision to handle the case through this in-house process, with a partisan panel of Democratic commissioners, deprives them of a fair trial.

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