Update: Status Of FTC Case Against Three Largest PBMs

Following a temporary pause (which began on April 1, 2025) of the Federal Trade Commission's (FTC) administrative action against the three largest Pharmacy Benefit Managers (PBMs) in the country, the PBMs moved to dismiss the case proceedings. The temporary pause was initially due to the removal of FTC Commissioner Slaughter and Commissioner Bedoya, which left the commission without the necessary members to proceed. However, over the summer months, specifically on July 7, 2025, the FTC moved to lift the stay as new Commissioners were appointed. The PBMs opposed this motion, arguing that the administrative proceedings should remain on hold while their separate but related case in the Eighth Circuit remains pending. Despite the PBMs' arguments, on August 27, 2025, the ALJ granted the FTC's motion and lifted the stay. In turn, on August 29, 2025, the PBMs filed a motion to dismiss.

By way of background, leading up to these more recent efforts by the FTC, the Federal Trade Commission (FTC) previously filed its administrative complaint against the three largest Pharmacy Benefit Managers (PBMs) in the United States on September 20, 2024. The FTC's complaint specifically targeted Caremark, Express Scripts, and Optum Rx Inc. These are the three largest PBMs in the country and collectively make up approximately 80% of the PBM marketplace. The FTC also asserted claims against each PBM's affiliated Group Purchasing Organizations (GPOs), also commonly known as rebate aggregators. The FTC's complaint alleged that these entities were engaged in anticompetitive and unfair rebating practices.

Background on the FTC's Investigation into the PBMs

The FTC's complaint made troubling allegations, including that the PBMs allegedly manipulated the market to inflate the list price of critical medications, particularly insulin. According to the FTC, this practice not only restricted patient access to more affordable options but also disproportionately impacted vulnerable populations who struggle to manage the costs of necessary medications. The allegations followed a comprehensive two-year examination by the FTC, which underscored the urgent need for industry reform.

Deputy Director of the FTC's Bureau of Competition, Rahul Rao, emphasized that the issue extends beyond just the PBMs. While the complaint does not name specific drug manufacturers, Rao indicated that their involvement in the alleged practices raises serious concerns. He cautioned that the Bureau reserves the right to recommend adding drug manufacturers as defendants in future cases, signaling a broader investigation into the pharmaceutical supply chain.

As the case moves forward, the implicated PBMs have filed a lawsuit against the FTC, seeking to halt the administrative proceedings on constitutional grounds. Their complaint, submitted to the United States District Court for the Eastern District of Missouri, presents four main arguments. The PBMs contend that the FTC's in-house proceedings violate Article III of the U.S. Constitution, asserting that the for-cause removal restrictions of FTC Commissioners infringe upon Article II, and claim that both the FTC's Administrative Law Judge and the Commissioners themselves are unconstitutionally insulated from removal. Additionally, they argue that the proceedings lack fairness due to alleged bias from the FTC Commissioners. This contentious lawsuit is currently pending in the Eighth Circuit.

In a related development, the FTC released its Second Interim Staff Report in January 2025, building on its ongoing examination of PBMs and their impact on prescription drug costs. This report scrutinizes 51 specialty generic drugs, including critical medications for cancer, heart disease, and HIV, dispensed from 2017 to 2022 to members of commercial health plans and Medicare Part D prescription drug plans managed by Caremark, Express Scripts, and Optum Rx.

PBMs Move to Dismiss FTC's Administrative Proceeding

As noted above, on August 29, 2025, the PBMs moved to dismiss the FTC's administrative proceedings. The PBMs argue that the FTC is overstepping its authority under the FTC Act. Specifically, the PBMs argued that the complaint failed to define any relevant market that the PBMs participate in, does not allege actual harm to competition in a market in which the PBMs compete and that the complaint relied on unsupported assertions rather than concrete facts. The PBMs argued that the harms alleged by the FTC are actually caused by independent third parties, such as pharmaceutical drug manufacturers and plan sponsors.

On September 19, 2025, the FTC filed an opposition to the PBMs' Motion to Dismiss. The FTC argued that the PBMs' Motion to Dismiss was not based on established law and precedent. The FTC argued that despite the PBM's arguments, the FTC Act does not require proof of collusion, exclusion, or specific market power. Instead, the FTC highlights that its broad statutory authority encompasses conduct that distorts competition or harms consumers through deception, bad faith, or oppression, regardless of whether there is collusion or traditional market dominance. The FTC argues that the complaint demonstrates substantial consumer injury, including health and financial harm to vulnerable patients, and that these injuries are not reasonably avoidable nor outweighed by any purported benefits.

At this time, the Motion to Dismiss has been fully briefed, and both parties await a final decision by the ALJ¹.

As the situation develops, the implications of the FTC's actions could reshape the landscape of drug pricing and patient access in the United States. Stakeholders across the healthcare industry will be closely watching how this case unfolds, as it may set important precedents for the regulation of PBMs and their impact on prescription drug costs. The outcome could ultimately influence how patients access essential medications, making it a pivotal moment in the ongoing dialogue surrounding healthcare affordability and fairness.

Footnote

1. As of the date of publication, the administrative proceeding has been temporarily paused due to the ongoing government shutdown.

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