FTC facing lawsuit and criticism over its handling of Pharmacy Benefit Managers (PBMs)

The FTC’s handling of PBMs is only the latest issue where the Lina Khan-controlled FTC has led to legal challenges for the Biden-Harris administration.

President Joe Biden’s Federal Trade Commission (FTC) is facing a lawsuit and heavy criticism from conservatives over the commission’s years-long aggressive action against pharmacy benefit managers (PBMs). The FTC continued its actions against PBMs with a lawsuit over insulin prices announced on Friday. 

The FTC’s handling of PBMs is only the latest issue where the Lina Khan-controlled FTC has led to legal challenges for the Biden-Harris administration. 

The FTC announced an inquiry into PBMs — the companies that are hired by employers and health insurance plans to negotiate with pharmaceutical manufacturers for lower drug costs — in 2022. Health care experts considered the  FTC’s action against PBMs unusual because it was a reversal of a decades-long stance by the FTC that PBMs lead to lower drug costs. 

Conservatives criticized the FTC for the reversal, and argued that the decision was politicized and driven by politics instead of policy, resulting in an ethics complaint against Khan by conservative watchdog, the American Accountability Foundation (AAF).

Now, the FTC faces a major lawsuit from Express Scripts, one of the largest PBMs, over a 2024 FTC interim report that criticized PBMs. The lawsuit argues that the interim report “followed prejudice and politics” instead of policy, and failed to acknowledge the evidence that “PBMs lower prescription drug costs for health plan sponsors (employers, unions, and governments) who use PBMs to negotiate with (among others) pharmaceutical manufacturers and retail pharmacies to drive cost savings.”

This lawsuit follows extensive criticism from conservatives on the FTC’s treatment of PBMs. Former Secretary of State Mike Pompeo said that “President Biden’s FTC Commissioners published a biased and deeply flawed report on pharmacy benefit managers (PBMs). The facts and data show that PBMs lower costs for patients. That’s why employers overwhelmingly use them. But all this administration cares about is growing its own power.”

Joel Zinburg from the Competitive Enterprise Institute recently criticized Khan’s “evidence-free interim report, which she has threatened could form the basis of future prosecutions.” Zinburg sees it as a continuation of Khan’s “shoddy work in pursuit of antitrust overreach.”

Khan’s actions against PBMs come following a string of legal defeats she’s suffered. Recently, her actions on non-competes had “no basis in law”; the Wall Street Journal noted that while “Federal Trade Commission Chair Lina Khan is a heroine to the media, [she is] not to federal judges, who keep ruling against her antitrust cases.”

Khan’s anti-consolidation actions “concretely jeopardiz[ed] Biden’s already-unlikely promise to cure cancer,” as The Spectator reported. 

A House Leadership aide told the Reporter that “Lina Khan is trying to do Kamala Harris a favor with her obsessing over PBMs, but it’s just politics. No one is falling for this.”