Dive Brief:
The Federal Trade Commission is pausing its litigation against major pharmacy benefit managers, saying it doesn’t have enough commissioners to try the case after President Donald Trump fired two Democrats last month.
The lawsuit filed last year by the Biden administration accuses Caremark, Express Scripts and Optum Rx — the so-called “Big Three” PBMs that are owned by CVS, Cigna and UnitedHealth, respectively — of artificially inflating the cost of insulin, driving up prices for payers and patients.
However, the FTC’s general counsel issued a stay in the case on Tuesday, saying “there are currently no sitting Commissioners able to participate in this matter” after commissioners Alvaro Bedoya and Rebecca Slaughter were fired, an action they’ve slammed as illegal and are fighting in court. Republican commissioners Andrew Ferguson, the FTC chair, and Melissa Holyoak are recused from the case.
Dive Insight:
PBMs are in increasingly hot water for what critics view as anticompetitive business practices that contribute to sky-high drug costs in America.
Lawmakers have dragged top PBM executives to Capitol Hill to testify and issued a flurry of bills targeting alleged profiteering on the part of the pharmaceutical middlemen, while antitrust regulators have investigated controversial practices like how PBMs negotiate medication discounts with drugmakers and how contracting maneuvers may be hurting independent pharmacies.
This culminated in the FTC’s lawsuit against the Big Three in September. Caremark, Express Scripts and Optum Rx have been in defensive posture since, with executives telling investors they plan to defend themselves aggressively against the allegations and countersuing the FTC in November.
Now, the PBMs may have a moment to breathe — 105 days to be exact, the minimum length of the pause in the FTC case. Evidentiary hearings will be set for 225 days after the stay is lifted. That means late February 2026 is the earliest the case might resume.
In a post on social media site X, Lina Khan, the FTC chair in the Biden administration, slammed the stay as “a gift to the PBMs.”
It is a positive for the companies, because it eliminates one factor that’s been weighing on their shares, TD Cowen analyst Charles Rhyee wrote in a note Wednesday. However, Rhyee noted that PBM reform could still be included in the reconciliation bill being hammered out in Congress.
It’s not clear why Holyoak and Ferguson elected to recuse themselves from the case. Of the two reports criticizing major PBMs that the FTC has released, Holyoak dissented with the FTC’s decision to release the first but agreed with the publication of the second. Ferguson voted in support of releasing both reports.
“We speculate that this could be a soft way for the administration to let the case die on the vine,” Rhyee wrote.
The development bodes well for an industry that’s been warily waiting to see how aggressively the Trump administration would handle antitrust matters following four years of heavy scrutiny under President Joe Biden.
Trump has moved to expand his control over the FTC, historically a body independent from the executive branch, through an executive order and his firing of Bedoya and Slaughter.
