The Hidden Architects of High Insulin Prices

EvilCorporations.com • FTC v. Caremark, Express Scripts & OptumRx • 63 min read

How Three Companies Took Control of What 200 Million Americans Pay for Drugs

Pharmacy Benefit Managers were originally administrative middlemen who processed prescription claims in the late 1960s. By 2023, three of them controlled the pipeline for roughly 80% of all U.S. prescriptions. Here is how that concentration happened and what it built.

• Caremark Rx, LLC (a CVS Health subsidiary) is the largest PBM in the country. In 2023 it administered 2.3 billion prescriptions, approximately 34% of the national total. Its 2022 revenue was $169.2 billion.
• Express Scripts, Inc. (an Evernorth/Cigna subsidiary) is the second largest PBM, administering roughly 23% of U.S. prescriptions in 2023. Its parent Evernorth earned $140.3 billion in revenue in 2022, the majority of which came from Express Scripts.
• OptumRx, Inc. (a UnitedHealth Group subsidiary) is the third largest PBM, administering roughly 22% of U.S. prescriptions in 2023. OptumRx recorded $99.8 billion in revenue in 2022.
• These three companies grew through a specific series of mergers: ESI acquired Medco Health Solutions in 2012 (combining the first and third largest PBMs at the time); Optum acquired Catamaran in 2015 (combining the third and fourth largest); and Caremark merged with Aetna’s PBM in 2018.
• Beyond horizontal consolidation, all three PBMs vertically integrated into conglomerates that also own pharmacies, health insurance companies, clinical providers, and drug distribution networks. This means they exert leverage at every link in the chain between a factory and a patient.
• PBMs serve employers, unions, government entities, and insurance companies by building drug formularies (approved drug lists), processing prescription claims, and negotiating with manufacturers for rebates. Their clients, called payers, include over 183 million people on employer-sponsored commercial insurance alone.

Chase the Rebate: How the Pricing Game Was Rigged Starting in 2012

The mechanics of the rebate system are deliberately complex, but the outcome is straightforward: the people who need medicine the most pay the most for it, while the middlemen collect billions.

• Drug manufacturers set a “list price,” also called the Wholesale Acquisition Cost (WAC). Everything in the system is calculated as a percentage of this number, including rebates paid to PBMs, administrative fees, data fees, and patients’ coinsurance and deductible payments.
• Before 2012, formularies were generally open: a drug would be on a “preferred” or “non-preferred” tier, but rarely excluded entirely. Manufacturers paid modest rebates for preferred placement, but could not be frozen out of coverage for tens of millions of patients.
• Around 2012, Caremark introduced the first commercial exclusionary formulary that cut clinically effective drugs from coverage entirely. The FTC complaint notes that in 2012 the predecessor to Caremark’s Standard Control Formulary excluded all forms of Lilly’s Humalog in favor of Novo’s Novolog.
• ESI followed in 2014 with its own exclusionary National Preferred Formulary. Optum introduced its Premium Formulary in 2016. Each of these flagship formularies covers tens of millions of people and excludes dozens of drugs.
• With the credible threat of total exclusion established, PBMs began demanding that manufacturers bid for formulary placement via “rebate grids.” Manufacturers submit different rebate rates for different tiers of exclusivity: being the sole manufacturer on a formulary commands the highest rates, being one of many commands lower rates. The winner is whoever pays the most back to the PBM.
• Administrative fees (a percentage of WAC), data fees (another percentage of WAC), and other WAC-based charges are layered on top of rebates. Because every fee is calculated as a percentage of list price, a drug with a higher list price generates more fee revenue for the PBM even though the PBM performs exactly the same services. As the FTC put it: the Respondents extracted and pocketed dollars without providing any additional value.
• In 2022, Sanofi paid Optum base rebates at a significantly higher percentage of WAC for its insulin Lantus when it was the sole long-acting insulin on the formulary, compared to the rate when it was one of many. The spread between exclusive and non-exclusive placement was the financial engine that drove the entire race to inflate prices.

From $21 to $274: The Documented Price History of Insulin Nobody Can Justify

Insulin is over a century old. The core medication has not fundamentally changed. These are the verified list price milestones drawn directly from the FTC complaint and manufacturer responses to Congress.

• In 1999, the average list price of Humalog (Lilly’s rapid-acting insulin) was $21 per vial. For nearly 85 years, insulin remained affordable. That ended around 2012 when exclusionary formularies were introduced.
• Lilly increased Humalog U-100’s list price from $122.60 in 2012 to $274.70 in 2017, a 124% increase in five years.
• Novo increased Novolog U-100’s list price from $122.59 in 2012 to $289.36 in 2018, a 136% increase.
• Sanofi increased Lantus U-100’s list price from $114.15 in 2012 to $283.56 in 2019, a 148% increase.
• By 2017, Humalog’s price had risen more than 1,200% since 1999. By comparison, the Consumer Price Index rose only 9% between 2012 and 2018, and the Prescription Drug CPI rose 20% over the same period.
• A 2022 report by the Department of Health and Human Services found insulin list prices nearly doubled between 2012 and 2016 alone.
• Total U.S. insulin spending tripled in a decade: from $8 billion in 2012 to $22.3 billion in 2022. By 2018, diabetes had become the top category of drug spending for traditional prescriptions.
• Lilly and Novo specifically sought to maintain list price parity with each other. Lilly’s then President of Diabetes stated that “we felt that we had to take similar price increases in order to be competitive … when Novo was taking price increases, if we didn’t take similar price increases, we didn’t think we could be competitive for [formulary] access.” Price increases were coordinated by competitive necessity, not medical or production cost.

What You Were Told vs. What Was Actually Happening Inside These Companies

The FTC complaint documents a systematic gap between the public statements these PBMs made about patient welfare and the internal decisions their own executives made about formulary design and rebate extraction.

Cheaper Insulin Existed. These Companies Made Sure You Could Not Access It.

Starting in 2019, insulin manufacturers introduced unbranded, lower-list-price versions of the same drugs. The FTC complaint documents in detail how every one of the three PBMs blocked patient access to these cheaper alternatives to protect their own revenue.

• In May 2019, Lilly launched a low-WAC version of Humalog priced 50% below the branded version. ESI and Optum, which were both exclusively preferring branded Humalog on their flagship formularies, responded by keeping high-WAC Humalog as the only covered option and excluding the affordable version entirely.
• In January 2020, Novo launched a low-WAC version of Novolog, also priced 50% below the branded version. Caremark, which was exclusively preferring Novo’s insulins, excluded low-WAC Novolog from its Standard Commercial Formulary while keeping the expensive version preferred.
• In June 2022, Sanofi launched a low-WAC version of Lantus priced 60% below the branded version. Optum, which exclusively preferred Sanofi’s insulins, excluded low-WAC Lantus from its Premium Formulary while maintaining the high-WAC version.
• The FTC makes an important structural point: PBM rebate contracts with manufacturers are based on which manufacturers are on a formulary, not on which specific products from that manufacturer are listed. This means a PBM could have added the cheap version alongside the expensive version without losing any rebate revenue. They chose exclusion anyway.
• Optum ran an internal financial analysis on what would happen if patient volume shifted from high-WAC Humalog to the low-WAC version. The analysis found a direct loss to Optum’s profitability. That analysis drove the formulary decision.
• Viatris introduced Semglee in August 2020, the first insulin biosimilar, initially priced 65% below Lantus. The PBMs excluded it from every flagship commercial formulary because it could not deliver rebate dollars comparable to existing brands. Viatris then relaunched Semglee with a high list price and high rebate. ESI added the high-WAC version to its National Preferred Formulary while excluding the affordable version.
• An internal Viatris model showed that despite similar net costs to payers for both versions, Viatris’s own net margin on the low-WAC Semglee pens was far lower than on the high-WAC version due to WAC-based fees throughout the supply chain. This fee structure made the affordable product economically unviable for the manufacturer to push.
• The result: in 2022, low-WAC Humalog accounted for only a small fraction of total Humalog volume. Lilly estimated only one out of three insured patients had access to low-WAC Humalog through their insurance. A Novo Vice President described the situation bluntly: “low wac/low rebate [insulins] don’t stand a chance in this system.”

The Timeline: From Affordable Drug to National Crisis

The Non-Financial Ledger: What This System Cost in Human Terms

In Their Own Words: Quotes the FTC Pulled From Internal Records

The following are direct statements from internal communications, depositions, and executive testimony as cited verbatim or near-verbatim in the FTC complaint. These are not allegations. These are their words.

“The intention of the G.P.O. is to create a fee structure that can be retained and not passed on to a client.”
— Former Optum executive who helped establish Emisar, Optum’s GPO subsidiary

“We can still drink down the tasty Lantus rebates.”
— Optum Vice President of Industry Relations, 2021 internal communication, as cited in the FTC complaint

“If you’re cutting the rebates by [X] percent, we’re not going to win that business… you have a lower rebate pool, and lower admin fees — do you think that the PBM is going to choose you? … If we were to do this, we likely [lose formulary placement], so the Lilly [sales] number would be zero.”
— Lilly’s former President of Diabetes, explaining PBM reaction to Lilly’s proposed 15% list price reduction

“The demands that PBMs have on insulin for rebates and discounts and fees have continued to increase over time.”
— Novo Nordisk Senior Vice President, responsible for strategic market access

“The narrower the formulary, the greater that discount that can be extracted from the manufacturer.”
— Sanofi’s Head of General Medicines Market Access

“[A]s long as [Viatris is] keeping the lower WAC they should price Semglee at twice the price of Lantus with a huge rebate and sell it to PBMs as a product that can cover their rebate guarantees #million dollar ideas.”
— Optum employee, internal communication, as cited in the FTC complaint

The Ripple Effects: Public Health and Economic Inequality

Public Health

The documented health consequences of the PBM rebate system extend from individual patient harm to population-level public health failures.

• In 2019, the PBM Respondents themselves estimated that 1 in 4 insulin-dependent patients could not afford their medication. This is a figure their own internal documents acknowledged.
• By 2021, peer-reviewed research in the Annals of Internal Medicine documented that 1.3 million adults with diabetes in the United States rationed insulin by delaying refills, skipping doses, or taking smaller doses than prescribed.
• Rationing insulin is medically dangerous. The American Diabetes Association’s own working group reported in 2020 that “people with high cost-sharing are less adherent to recommended dosing, which results in short- and long-term harm to their health.” Short-term harm includes diabetic ketoacidosis. Long-term harm includes heart disease, kidney failure, nerve damage, vision loss, infection, and amputation.
• In 2020, 240,000 patients visited U.S. emergency rooms with diabetic ketoacidosis. A preventable condition that is directly linked to insulin rationing contributed to a quarter-million ER visits in one year.
• Diabetes was the eighth leading cause of death in the United States in 2021, with over 100,000 deaths listing it as the underlying cause. The prevalence of diagnosed diabetes more than doubled in the two decades before 2023, according to the CDC.
• Optum’s own website acknowledged the “proven link between rising member cost share and lower medication adherence.” A UnitedHealth press release stated that better adherence “contributes to better health and reduces total health care costs.” These companies documented the causal chain from their formulary decisions to patient harm in their own marketing materials.
• The increased risk of hospitalization and additional medical complications for patients who skip insulin doses creates higher expected costs for both patients and commercial payers down the line. The FTC complaint concludes that these downstream costs outweigh any potential small decrease in premiums attributable to rebates shared with payers.

Economic Inequality

The financial burden of the PBM rebate system falls heaviest on the people with the least financial cushion, by structural design.

• Patients most harmed are those with coinsurance or deductibles, because their out-of-pocket costs are calculated against the inflated list price before any rebates are applied. Patients with flat copays are largely insulated. The FTC found that at least 23% of workers with employer-based drug coverage pay coinsurance for preferred branded drugs, with an average coinsurance rate of 26% in 2023.
• In 2024, high-deductible health plans required individuals to spend between $1,600 and $8,050 out of pocket before coverage begins. In 2023, 29% of adults with employer-based insurance were enrolled in HDHPs, up from 19% in 2012. These plans were sold to workers as a trade-off for lower monthly premiums, but they exposed those workers to the full inflated list price of insulin until the deductible was met.
• A 2017 CDC National Health Interview Survey found that adults at the lowest income levels, from below the federal poverty line up to 138% of the federal poverty line, were the most likely to have HDHPs without health savings accounts. The patients most financially vulnerable faced the greatest exposure to list-price-based out-of-pocket costs with no tax-advantaged buffer.
• According to the FTC complaint’s mathematical example, a patient with 30% coinsurance on a $100 list price drug with a 75% rebate pays $30 out of pocket. The insurer pays the pharmacy $70 but receives $75 in rebates, netting a $5 gain. The sick patient pays more than the insurer pays. This is not an edge case; it is a documented feature of the system for highly rebated drugs like insulin.
• A 2023 Milliman Medical Index found that employers allocate 70% of rebates to reduce corporate employer contributions to premiums and 30% to reduce employee premiums. Zero percent was directed toward patients’ out-of-pocket drug costs. The financial benefit of the rebate system flows upward: first to the PBM and GPO, then to the employer, and finally to the broad pool of insured employees through marginally lower premiums. The diabetic patient paying full coinsurance on their insulin gets none of it.
• Insulin rationing is more common among lower- and middle-income patients and among Black patients, according to peer-reviewed research cited in the FTC complaint. These groups are also more likely to be enrolled in high-deductible plans without savings accounts. The system compounds existing economic and racial health disparities.
• In 2022, 27.6 million Americans, or 8.4% of the population, had no health insurance at all. These uninsured patients pay based on the full list price. For them, the rebate system is entirely irrelevant; they absorb the entire inflated WAC without any negotiated discount.

The “Cost of a Life” Metric

What Now: Who to Watch, Who to Press, and Where to Act

The FTC complaint is a legal document, not a resolution. The named corporate respondents and their parent companies continue to operate as the dominant gatekeepers of prescription drug access for over 200 million Americans.

The Named Respondents and Their Corporate Parents

• Caremark Rx, LLC and its GPO, Zinc Health Services, LLC. Both are indirect subsidiaries of CVS Health Corporation. Caremark is the largest PBM in the United States and administered 34% of all U.S. prescriptions in 2023.
• Express Scripts, Inc., Evernorth Health, Inc., and Medco Health Services, Inc. and their GPO, Ascent Health Services LLC (incorporated in Switzerland). All are owned by Cigna Corporation.
• OptumRx, Inc. and OptumRx Holdings, LLC and their GPO, Emisar Pharma Services LLC (incorporated in Ireland). Both are subsidiaries of UnitedHealth Group Inc.

Regulatory Watchlist

• Federal Trade Commission (FTC): Filed the complaint under Section 5 of the FTC Act. Docket No. 9437 is the active proceeding. The FTC’s authority to pursue administrative enforcement actions is the primary legal mechanism in this case.
• Department of Health and Human Services (HHS) Office of Inspector General: Found that most health plans were unaware of all the contract terms determining what rebates they receive from drug manufacturers. Their ongoing audit and oversight function is a documented check on PBM practices.
• State Insurance Commissioners: The Texas Department of Insurance data cited throughout this case is an example of state-level data collection that exposed actual PBM fee retention. Your state’s insurance regulator may have parallel authority and reporting requirements.
• U.S. Congress (Senate Finance and House Energy and Commerce Committees): Both committees have conducted PBM oversight hearings, including the 2023 testimony where PBMs claimed 95–98% rebate pass-through. That testimony is now contradicted by FTC findings.
• Centers for Medicare and Medicaid Services (CMS): Administers the Medicaid AMP Cap rules that were changed in 2021. The regulatory pressure from the American Rescue Plan’s AMP Cap repeal was the primary force that drove list price cuts in March 2023, not voluntary PBM reform.
• Department of Justice Antitrust Division: The FTC’s complaint involves competition law violations. DOJ Antitrust has overlapping jurisdiction on anticompetitive conduct in pharmaceutical markets.

Mutual Aid, Organizing, and Direct Action

• Find or start an insulin mutual aid network. Organizations like Mutual Aid Diabetes and local Facebook/Reddit groups have connected people with surplus insulin for years. These networks exist because the system described in this article is real and ongoing, and the legal case will take years. People need insulin now.
• Check your own formulary. Go to your insurance card, find your PBM, and look up whether your insulin is on the preferred tier or excluded. If it is excluded and a cheaper alternative exists, ask your doctor and your HR department why. Your employer controls this decision and may not know what they signed up for.
• Demand point-of-sale rebates from your employer’s benefits administrator. The FTC complaint documents that point-of-sale rebates would directly reduce out-of-pocket costs for patients with coinsurance and deductibles. Employers can require PBMs to implement them. Most do not because PBMs actively disincentivize it. Unionized workers should push this at the bargaining table.
• Submit a public comment to the FTC during the administrative proceeding. Docket No. 9437 is an active matter. Public testimony and comment from affected patients is part of the administrative record.
• Contact your state insurance commissioner’s office and ask whether your state collects PBM rebate pass-through data the way Texas does. If it does not, ask why. The Texas data was central to proving the FTC’s case.
• Support and amplify the work of Type 1 diabetes advocacy organizations that have documented the human cost of insulin pricing for years, including through direct testimony before Congress and the FTC. Their work is what put patient stories into the public record that made this complaint possible.