FTC Vote to Resurrect Robinson-Patman Will Help Lower Cost of Drugs & Insulin

June 16, 2022 Press Release

Washington, D.C. — The American Economic Liberties Project released the following statement in response to a unanimous vote from the Federal Trade Commission on a policy statement to resurrect the use of an old law against corporate bribery, and to use this law to take on the insulin cartel. Insulin is far too expensive, but that cost increase is mostly a result not of the original producers, but the dominant middlemen who control whether an insurance company will buy the medication in the first place. These pharmacy benefits managers demand rebates of up to 70% for the right to have an insulin company sell their product to patients. These rebates in turn massively drive up the cost of insulin.

“We applaud the Federal Trade Commission for finally cracking down on the corrupt middlemen in the medical supply chain that have been driving up the price of insulin, among other drugs, for far too long,” said Katherine Van Dyck, Senior Legal Counsel at the American Economic Liberties Project. “We also think it’s critical that a bipartisan group of commissioners began the important step of resurrecting the Robinson-Patman Act, which is a key antitrust law that protects the American business person and worker from the monopolist. This law hasn’t been enforced in any meaningful way since the 1970s, and the result has been the rise of dominant middlemen across the economy. The insulin fiasco is just the tip of the iceberg.”

Section 2(c) of the Robinson-Patman Act prohibits corporate bribery, or the receipt or payment of “anything of value as a commission, brokerage, or other compensation, or any allowance or discount in lieu thereof, except for services rendered.” Rebates from insulin producers paid to PBMs fall into this category. CVS Caremark, Cigna (Express Scripts), and United Healthcare (OptumRx) are the three largest PBMs, controlling 80% of the market for drug purchasing by insurance companies. In addition, as FTC Chair Khan mentioned, Section 3 of the Clayton Act, and Section 5 of the Federal Trade Commission Act outlaw these practices.

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The American Economic Liberties Project works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.