PBMs call for FTC commissioners' recusal from antitrust case
Cigna, UnitedHealth and CVS Caremark are requesting FTC commissioners step down from a PBM lawsuit, alleging prejudgment and bias in the agency's review process.
Cigna, UnitedHealth and CVS Caremark are calling for the recusal or removal of Federal Trade Commission Chair Lina Khan and two other commissioners from an ongoing lawsuit targeting the companies and other pharmacy benefit managers. Attorneys for the companies argue that Khan and Commissioners Alvaro Bedoya and Rebecca Kelly Slaughter have a long-standing history of publicly criticizing PBMs, which has created a bias that threatens the objectivity of the legal proceedings.
In separate filings with the FTC on Oct. 8, 2024, the PBMs accused the commissioners of harboring a "serious bias" against their business practices, asserting that their involvement violates due process rights. The three companies argue that Khan and the two commissioners have already prejudged the case and should not participate in the agency's review.
"The Three Commissioners' public condemnations of Caremark, Zinc, and the other Respondents would lead any neutral observer to believe that their minds are -- at the outset of this action -- irrevocably closed to contrary views of PBMs and their conduct," CVS Caremark stated in its motion. "Their disqualification from this matter is required."
FTC targets PBMs' rebate practices
The dispute arises as the FTC pursues a lawsuit against 2023's top three PBMs: CVS Caremark, Cigna's Express Scripts and UnitedHealth's OptumRx, alleging the PBMs engaged in anticompetitive practices that boosted their profits while artificially inflating the list prices of insulin. The lawsuit, announced last month, accuses PBMs of using rebate structures to manipulate drug pricing, creating a complex supply chain that ultimately impacts patient access and affordability.
Accusations of prejudgment and bias
According to Optum, the commissioners' public stance makes it impossible for the PBMs to receive a fair hearing. "To any objective observer, these facts render this administrative proceeding a sham in which OptumRx cannot possibly persuade the Commissioners by evidence," the company's attorneys wrote.
The FTC has declined to comment on the PBMs' filings, but the case is expected to set a precedent for how the agency handles conflicts of interest and commissioner impartiality in future enforcement actions.
In its filing, Cigna pointed to multiple public statements made by Khan regarding the role of PBMs in controlling patient drug access and costs. The company claims that Khan has "prejudged the facts and law relating to this action," which signals to a "disinterested observer" that she is not impartial in matters involving PBMs.
The companies' motions also criticize Khan for appearing at the National Community Pharmacists Association's 2022 convention, where she commended the organization's opposition to PBMs. According to CVS's filing, "Event participants wore anti-PBM paraphernalia, including pins that vilified PBMs as 'bloodsuckers' and shirts depicting PBMs as vampires."
This backdrop has led the PBMs to contend that Khan's involvement in the case could jeopardize the fairness of the administrative process. The three commissioners in question are all Democrats, while the FTC's two Republican commissioners, Melissa Holyoak and Andrew Ferguson, have already recused themselves from the case.
Increased regulatory scrutiny on PBM practices
This development arises as the Biden administration heightens its focus on the PBM industry. PBMs play a key role in the pharmaceutical supply chain by negotiating drug prices, managing patient access, and setting formularies. Recently, both the administration and the FTC have expressed concerns about the lack of transparency in these practices and their potential influence on drug pricing.
An FTC report released in July 2024 accused PBMs of "inflating drug costs and squeezing Main Street pharmacies," a sentiment echoed by policymakers and independent pharmacies that have long called for PBM reform.
In response, Cigna's Express Scripts sued the FTC over the report, demanding it be retracted due to "false and misleading claims" about the industry. Just days after the lawsuit was filed, the FTC announced its legal action against CVS Caremark, Express Scripts, and OptumRx.
Pushback from Khan's recusal history
Seeking Khan's recusal has become common among corporations facing FTC scrutiny, particularly as the agency has ramped up its enforcement activities. Tech giants like Amazon and Meta have previously filed similar motions against the FTC chair, arguing that her vocal stance on antitrust issues presents a conflict of interest. Khan has refused to step down, arguing that her role is to rigorously enforce antitrust laws and protect competition.
The FTC has declined to comment on the PBMs' filings, but the case is expected to set a precedent for how the agency handles conflicts of interest and commissioner impartiality in future enforcement actions.
The FTC's case against the PBMs is being brought under the agency's administrative process. After an investigation, an administrative law judge will hear the case and issue an initial decision, which can then be appealed to the full Commission. From there, the ruling could be contested in a circuit court, with the potential for a Supreme Court review if the parties choose to pursue it further.
As the legal battle unfolds, the outcome could have significant ramifications for the PBM industry, shaping how these intermediaries operate and the regulations they face in the years to come.
Alivia Kaylor is a scientist and the senior site editor of Pharma Life Sciences.
