CVS, Cigna, UnitedHealth press for FTC Chair Khan to be removed from PBM lawsuit

Cigna, UnitedHealth and CVS Caremark are calling Federal Trade Commission (FTC) Chair Lina Khan and two other commissioners to either recuse themselves, or be removed from the agency’s lawsuit against the companies and other pharmacy benefit managers (PBMs).

Attorneys for UnitedHealth’s Optum Rx, Cigna and CVS Caremark said Khan, along with Commissioners Alvaro Bedoya and Rebecca Kelly Slaughter, have long track records of publicly maligning PBMs that indicate a “serious bias” against them.

In separate filings with the FTC late Tuesday, the companies said the commissioners are far from objective, and their involvement in the proceedings would be a violation of the companies’ due process rights.

The FTC announced the lawsuit last month against CVS Caremark, Cigna’s Express Scripts and UnitedHealth’s OptumRx for engaging in alleged anticompetitive practices that boosted profits while “artificially” inflating the list price of insulin.

The companies argued the commissioners have already concluded that the PBMs’ rebate practices are “unfair and illegal.”

“The Three Commissioners’ public condemnations of Caremark, Zinc, and the other Respondents would lead any neutral observer to believe that their minds are — at the outset of this action — irrevocably closed to contrary views of PBMs and their conduct,” Caremark wrote in a motion. “Their disqualification from this matter is required.”

Optum’s motion argued the commissioners have an “extensive public record of statements and actions exhibiting serious bias.”

“To any objective observer, these facts render this administrative proceeding a sham in which Optum Rx cannot possibly persuade the Commissioners by evidence,” the company’s attorneys wrote.

In one of three motions filed, Cigna said Khan has “prejudged the facts and law relating to this action.”

After hearing her public statements about how PBMs control patient drug access and cost, they said any “disinterested observer could come to no other conclusion” except that she is prejudiced against PBMs.

In addition, all three PBMs called out Khan for appearing at the National Community Pharmacists Association’s convention in 2022, where she commended the organization’s work opposing PBMs.

“Event participants wore anti-PBM paraphernalia, including pins that vilified PBMs as ‘bloodsuckers’ and shirts depicting PBMs as vampires,” CVS wrote in the filing.

The commissioners in question are all Democrats. The FTC’s two Republican commissioners, Melissa Holyoak and Andrew Ferguson, previously recused themselves.

The FTC declined to comment on the filings.

The case is being brought under FTC’s administrative process. Once a complaint is issued after an investigation, the case then proceeds in front of an administrative law judge. The judge will hear the case and eventually issue an initial decision. That decision can then be appealed to the full Commission, which may hold a hearing and will eventually issue its opinion. That decision can then be appealed to any of the circuit courts, and parties can eventually petition the Supreme Court if they so choose.

Pushing for Khan’s disqualification is a common tactic among corporations facing FTC legal action, including tech giants Amazon and Meta. Khan has refused to do so and has come under fire from congressional Republicans as a result.

The Biden administration has been upping the pressure on PBMs, scrutinizing the business practices of the industry and seeking to shine light on the opaque intermediaries at the center of the pharmaceutical distribution system.

An FTC report in July slammed PBMs for “inflating drug costs and squeezing Main Street pharmacies.”

Cigna’s Express Scripts sued the FTC over the report last month , demanding it be retracted because it is “filled with false and misleading claims” about the PBM industry.

The FTC announced its lawsuit days later.

Updated Oct. 10 at 10:34 a.m.

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