On Friday, the Federal Trade Commission (FTC) filed a formal complaint against three major pharmacy benefit managers (PBMs)—CVS Health Inc’s CVS Caremark, Cigna Corp’s CI Express Scripts, and UnitedHealth Group Inc’s UNH Optum—for allegedly engaging in unfair and anti-competitive practices that have inflated the list price of insulin medications.

The complaint accuses the PBMs of creating a system that benefits them financially by prioritizing drug rebates, forcing patients to pay higher costs for life-saving insulin. These PBMs, referred to as the Big Three, administer around 80% of prescriptions in the U.S.

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The FTC claims that the PBMs abused their market power to inflate insulin prices by promoting a rebate system with drug manufacturers.

This system led to the exclusion of lower-priced insulin from formularies, further driving up the cost for vulnerable patients.

The result is higher out-of-pocket expenses for those needing essential diabetes medication.

For example, the list price of Eli Lilly And Co’s LLY Humalog rose dramatically from $21 in 1999 to over $274 in 2017.

Despite the availability of lower-priced alternatives, PBMs favored higher-priced drugs due to the lucrative rebates they provided.

The FTC is also examining the role of drug manufacturers, including Eli Lilly, Novo Nordisk A/S NVO, and Sanofi SA SNY, in driving up insulin prices, signaling potential further action against these companies.

The rebate-driven system excluded lower-priced insulins and allowed the Big Three PBMs to keep significant revenue in the form of rebates and fees, a strategy that hurt patients while benefiting the PBMs financially.

Vulnerable patients, such as those with high deductibles or coinsurance, bore the brunt of these inflated costs, paying more for their insulin than the overall net cost to insurers.

Price Action: At last check Friday, CVS stock was down 1.61% at $57.49, UNH stock was down 0.29% at $575.39, and CI stock was up 0.07% at $357.52.

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