In 1999, a vial of Humalog, a widely used insulin, cost $21. By 2017, that same vial carried a list price of more than $274 (a 1,200% increase). While the pharmaceutical industry often takes the blame, a recent federal complaint exposes a far more insidious force driving this inflation: a cartel of pharmacy benefit managers (PBMs) and their secretive group purchasing organizations (GPOs). These corporate middlemen (Caremark/CVS, Express Scripts/Cigna, and Optum/UnitedHealth) did not just fail to control costs; they deliberately engineered a system that rewards high sticker prices and punishes affordability. The result is a public health catastrophe wherein sick patients subsidize the healthy and corporate coffers swell while diabetics skip doses to survive.

The Gatekeepers Who Profit from High Prices

Pharmacy benefit managers were originally created to process claims and manage drug benefits. Over two decades of mergers and vertical integration, they have transformed into behemoths that dictate which drugs patients can access and at what price. Caremark (owned by CVS), Express Scripts (owned by Cigna), and OptumRx (owned by UnitedHealth) sit at the center of the pharmaceutical supply chain. They design drug formularies, lists that determine coverage. And about a decade ago, they introduced a game-changing threat: the exclusionary formulary.

With exclusionary formularies, if a drug manufacturer does not offer a large enough rebate to the PBM, the PBM can simply block that drug from coverage entirely. For a manufacturer like Eli Lilly or Novo Nordisk, exclusion means losing access to tens of millions of insured patients overnight. The PBMs leveraged this fear to demand higher and higher rebates, calculated as a percentage of the drug’s list price (Wholesale Acquisition Cost, or WAC).

This created a perverse incentive: the higher the list price of the drug, the larger the rebate check the PBM receives. Additionally, the PBMs (through their GPOs like Zinc, Ascent, and Emisar) extract administrative and data fees that are also calculated as a percentage of the list price. The corporate machinery was built to chase the highest possible sticker price, not the lowest net cost.

Insulin: The Poster Child of Corporate Greed

Insulin is not a luxury; for 8.4 million Americans, it is a requirement for survival. Because multiple manufacturers produce similar rapid-acting and long-acting insulins, the PBMs could pit them against each other in a brutal bidding war for exclusive formulary placement.

The internal documents cited in the complaint lay bare the strategy. In 2012, before exclusionary formularies dominated, Sanofi’s average contractual rebate rate to Optum for Lantus was in the low double digits. By 2022, after Optum had introduced its “Premium Formulary” and threatened exclusion, the rebate rate for Lantus soared to as high as 78% of the list price. To afford these rebates and still maintain profit margins, Sanofi increased the list price of Lantus by 148% between 2012 and 2019.

This pattern repeated across the industry. Lilly increased Humalog’s price by 124% and Novo increased Novolog’s by 136% over similar periods. A former Lilly executive explained the dynamic bluntly: “The reason you see these type[s] of price increases is as a way to compensate for the very high rebates that the company would offer.”

Blocking the Cure: The War on Low-Cost Insulin

As public outrage grew over skyrocketing prices, manufacturers attempted a solution: they created “low WAC” versions of their own insulins. These were chemically identical to the high-priced brands but carried a list price 50% to 60% lower, with correspondingly lower rebates. Lilly launched a low-cost Humalog, Novo a low-cost Novolog, and Sanofi a low-cost Lantus.

The PBMs systematically sabotaged these alternatives.

On their flagship formularies (the ones used by millions of employees), Caremark, ESI, and Optum overwhelmingly chose to cover only the high list price, high rebate versions. They explicitly excluded the affordable versions. When Viatris launched a new long-acting insulin called Semglee at a 65% discount to Lantus, the PBMs refused to cover it on their flagship plans. Viatris was forced to relaunch a high list price, high rebate version of Semglee just to gain formulary access.

An internal Novo document summarized the reality: “low wac/low rebate [insulins] don’t stand a chance in this system.” The result was predictable: as of 2022, low-cost insulin versions accounted for less than 1% of total volume for their respective molecules. The corporate gatekeepers had successfully defended their rebate stream.

The Sick Subsidize the Healthy: Cost-Shifting by Design

The final, cruelest layer of this corporate scheme is how it targets the sickest patients. Insurers and employers (the PBMs’ clients) are attracted by the promise of large rebate guarantees. However, those rebates are almost never passed on to the patient at the pharmacy counter. Instead, they are used to lower the overall cost of the health plan, often reducing premiums for everyone.

For patients with high-deductible health plans or coinsurance (where they pay a percentage of the drug’s cost), their out-of-pocket payment is calculated based on the artificially inflated list price, not the net price after rebates. This creates a grotesque inversion of insurance logic.

The complaint provides a stark example: A drug with a $100 list price and a 75% rebate has a net cost to the insurer of just $25. A patient with 30% coinsurance, however, pays $30 at the counter (30% of $100). The patient pays $30 for a drug that costs the payer $25. The payer effectively makes a $5 profit on a sick person’s prescription. In high-deductible phases, the patient pays the full $100 while the payer collects a $75 rebate.

This is not an accident. It is a feature of the benefit designs that PBMs consult on and administer. They are aware that point-of-sale rebate programs (which would apply the discount to the patient’s cost) are unpopular with payers because they reduce the rebate dollars available to subsidize premiums. By 2023, industry data showed that only a tiny fraction of rebates ever reached the patient at the counter.

The “Tasty” Profits of Suffering

Why do the PBMs cling so tightly to this system? Because the percentage-based fees on inflated list prices are a goldmine. The complaint reveals that in 2020, insulin products comprised a massive portion of Optum’s total commercial rebates, and the company realized substantial profit margins specifically from insulin. An internal Optum executive described the dynamic with chilling candor: “We can still drink down the tasty Lantus rebates.”

When the American Rescue Plan of 2021 repealed a Medicaid rebate cap (threatening to force manufacturers to lower list prices or face massive penalties), the PBMs did not celebrate lower costs for patients. Instead, they pivoted to protect their revenue. They began steering patients toward newer, patented insulin formulations that were not subject to the price cuts because their list prices had not been inflated over time. The game of whack-a-mole continued, with corporate profits as the constant winner.

A Broken Market Held Hostage

The corporate misconduct detailed in this evidence is not merely a story of high drug prices; it is a story of a rigged market. Normally, competition drives prices down. But the PBMs have inverted competition so that manufacturers compete on who can offer the biggest rebate, which necessitates the highest list price. When a manufacturer tries to compete by offering a genuinely low price, the gatekeepers lock them out of the market.

This system was built by Caremark, Express Scripts, and Optum. It is sustained by their wholly-owned GPOs: Zinc, Ascent, and Emisar. And it is paid for in the blood and bank accounts of diabetics forced to choose between rent and insulin. While the corporate conglomerates report billions in revenue, the human toll is measured in emergency room visits for diabetic ketoacidosis and graves for those who could not afford to stay alive.

The evidence is clear. The corporate actors controlling the pharmacy counter have chosen profit over patients, and they have built a multi-billion dollar infrastructure to ensure nothing changes.