The country’s largest pharmacy benefit managers and group purchasing organizations are going on offense against the Federal Trade Commission (FTC).
Express Scripts, Caremark and Optum Rx—owned by Cigna, CVS Health and UnitedHealth Group, respectively—are arguing in a new lawsuit the FTC’s recent actions and administrative process subvert the U.S. Constitution by reforming an industry by “regulatory fiat.”
This is in response to a September lawsuit filed by the FTC against PBMs and group purchasing organizations, also vertically integrated with insurers. The agency alleges the companies acted as drug middlemen to inflate the cost of insulin, but PBMs claim they save consumers money by lowering net drug costs. Instead, they shift blame to drug manufacturers.
The PBMs claim the FTC’s viewpoint on PBM pricing and contracting strategy is subjective and would force PBMs to rework agreements.
“This sweeping attempt to reshape an entire industry via law enforcement would never pass muster in a U.S. District Court,” the plaintiffs said. They add the FTC has given itself the right to not stop there.
PBMs argue the FTC has no right to interfere with private contracts and transactions, the FTC’s suit was brought forward before an administrative law judge that is “insulated from democratic authority” and the FTC will unfairly be the sole arbiters of right and wrong.
“It has become fashionable for corporate giants to argue the FTC 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,” countered Douglas Farrar, an FTC spokesperson, in a post on X. “It will not work.”
The FTC is comprised of five members, including Democratic Chair Lina Khan, who will likely find herself replaced in a Trump administration, although Vice President-elect JD Vance and attorney general nominee Matt Gaetz have spoken positively of Khan previously.
FTC commissioners are appointed by the president, and administrative law judges can only be removed by the Merit Systems Protection Board. The agency’s complaint is scheduled for Aug. 27, 2025.
PBMs, in this suit, are claiming the FTC has too much executive power. Federal agencies’ power may be weaker than in previous eras after recent Supreme Court decisions.
Officials and advisers close to Trump have long said there is a power imbalance between the executive branch, Congress and federal agencies, as they seek to rein in regulations.