The Federal Trade Commission (FTC) is preparing to file a lawsuit against the three largest pharmacy benefit managers (PBMs) in the United States, the Wall Street Journal reported. The list includes UnitedHealth’s (NYSE:UNH) OptumRx, Cigna’s (NYSE:CI) Express Scripts, and CVS Health’s (NYSE:CVS) Caremark. This potential suit follows a two-year probe into whether these companies have been using unfair methods to inflate drug prices, especially insulin.
FTC Chair Lina Khan has emphasized that the investigation aims to ensure a more cost-effective healthcare system. Moreover, the regulator aims to investigate potential manipulation of drug pricing and enhance transparency by reviewing PBM practices.
Before going further, it’s important to understand what PBMs are. PBMs serve as intermediaries between insurers and drug manufacturers. They negotiate discounts on prescription drugs, which directly impact what patients pay. Interestingly, the three PBMs in question control about 80% of U.S. prescriptions.
The Potential Allegations
It’s important to note that on Tuesday, the FTC published an interim report on PBMs’ practices. The report focuses on PBMs’ relationships with pharmacies and raises concerns about potential cost increases for clients and patients.
The report stated that PBMs had agreed to remove certain drugs from their lists in return for higher rebates from manufacturers. This might have restricted patients’ access to more affordable medications.
What are the Best Healthcare Stocks to Buy?
Among the three healthcare stocks mentioned above, both CI and UNH have a Strong Buy consensus rating, while CVS has a Moderate Buy rating. Moreover, analysts project the highest upside potential of about 20% in Cigna.
