Raphael Stevens

The Federal Trade Commission is planning to sue three large U.S. health companies over their practices as middlemen who negotiate prices for medications such as insulin, a person familiar with the matter told CNBC.
The suits are set to target the three biggest so-called pharmacy benefit managers, UnitedHealth Group’s Optum Rx, CVS Health’s Caremark and Cigna’s Express Scripts, which are all owned by or connected to health insurers.
The agency argues their tactics contribute to inflated drug prices.

Federal Trade Commission Chair Lina Khan testifies during a hearing of the House Appropriations Subcommittee on Financial Services and General Government, May 15, 2024.
Tom Williams | CQ-Roll Call, Inc. | Getty Images

The Federal Trade Commission is planning to sue three large U.S. health companies over their practices as middlemen who negotiate prices for medications such as insulin, as the agency argues they inflate costs for patients, a person familiar with the matter told CNBC on Wednesday.
The suits are expected to target the three biggest so-called pharmacy benefit managers, UnitedHealth Group’s Optum Rx, CVS Health’s Caremark and Cigna’s Express Scripts, the person said, confirming an earlier Wall Street Journal report Wednesday about the agency’s plans. All three are owned by or connected to health insurers. 

The lawsuits will specifically focus on the business practices related to the rebates the pharmacy benefit managers, or PBMs, broker with drug manufacturers, the Journal reported, citing people familiar with the matter. 
A CVS Caremark spokesperson said in a statement Wednesday that the company is “proud of the work we have done to make insulin more affordable for all Americans with diabetes, and we stand by our record of protecting American businesses, unions, and patients from rising prescription drug prices.”

A customer visits a CVS pharmacy store in Miami, Feb. 7, 2024.
Joe Raedle | Getty Images

An Express Scripts spokesperson said the “prices of insulin and other medicines are set by their manufacturers, who have raised list prices repeatedly.” The spokesperson said Express Scripts works to “combat the pharmaceutical industry’s high prices and lower the cost of thousands of medicines for patients and their health plans, and the data shows that we succeed.”
A spokesperson for Optum Rx did not immediately respond to a request for comment. 
The FTC declined to comment on the reported lawsuits.

PBMs sit at the center of the drug supply chain in the U.S. They negotiate rebates with drug manufacturers on behalf of insurers, large employers and others. They also create lists of medications — or formularies — that are covered by insurance and reimburse pharmacies for prescriptions. 
The FTC has been investigating PBMs since 2022. The investigation into insulin prices also examines drugmakers, but it is unclear whether they will be named in the upcoming lawsuits, Politico reported, citing people familiar with the matter. Eli Lilly, French drugmaker Sanofi and Danish pharmaceutical company Novo Nordisk control roughly 90% of the U.S. insulin market.

Pharmacist Thomas Jensen looks over a prescription drug at the Rock Canyon Pharmacy in Provo, Utah, on May 9, 2019.
George Frey | Reuters

The FTC on Tuesday released a scathing interim report based on the ongoing investigation into PBMs. The report accused the three largest PBMs of manipulating the drug supply chain to enrich themselves at the expensive of smaller, independent pharmacies and U.S. patients. 
Six of the largest PBMs handled nearly 95% of the prescriptions filled in the U.S., the FTC’s report said. 
PBMs contend that manufacturers are responsible for high drug prices, while drugmakers say rebates and fees collected by those middlemen force them to increase list prices for products.
The Biden administration and Congress have ramped up pressure on PBMs, seeking to increase transparency into their operations as many Americans struggle to afford prescription drugs. On average, Americans pay two to three times more than patients in other developed nations for prescription drugs, according to a fact sheet from the White House.
President Joe Biden’s signature Inflation Reduction Act has capped insulin prices for Medicare beneficiaries at $35 per month. That policy currently does not extend to patients with private insurance. More

NASA leadership on Wednesday acknowledged potential alternatives to Boeing’s Starliner for returning a pair of astronauts from the International Space Station.
Starliner has now been in space 36 days and counting as NASA and Boeing perform additional testing to replicate issues identified with the propulsion system, before clearing the spacecraft to return.
A NASA official noted that an “end of July” return for Starliner is “optimistically” based on completing the testing being done in New Mexico.

NASA astronauts Butch Wilmore (R) and Suni Williams, wearing Boeing spacesuits, depart the Neil A. Armstrong Operations and Checkout Building at Kennedy Space Center for Launch Complex 41 at Cape Canaveral Space Force Station in Florida to board the Boeing CST-100 Starliner spacecraft for the Crew Flight Test launch, on June 5, 2024.
Miguel J. Rodriguez Carrillo | Afp | Getty Images

With NASA astronauts docked at the International Space Station far longer than planned, the agency’s leadership on Wednesday acknowledged potential alternatives to Boeing’s Starliner for returning the crew to Earth.
Still, the Boeing’s spacecraft remains the primary option for returning crew, officials said.

Officials say Starliner capsule “Calypso” may return as soon as the end of this month from its extended ISS stay, pending results of testing a faulty propulsion system. Starliner has now been in space 36 days and counting as the agency and Boeing perform additional testing in New Mexico before clearing the spacecraft to return.
The mission is the first time Starliner is carrying people, flying NASA astronauts Butch Wilmore and Suni Williams.
NASA’s Commercial Crew manager Steve Stich emphasized during a press conference that the first “option today is to return Butch and Suni on Starliner,” adding, “we don’t see any reason” currently to turn to the agency’s other transportation option, which would be SpaceX’s Crew Dragon, to bring back the astronauts.

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Stich — while acknowledging that a SpaceX capsule could be part of contingency plans in case Starliner were to return from the ISS empty — noted that NASA does not yet need to “make a decision as to whether we need to do anything different.”
“Certainly we’ve dusted off a few of those things to look at relative to Starliner, just to be prepared in the event that we would have to use some of those kinds of things,” Stich said.

“[But] there’s really been no discussion with sending another Dragon to rescue the Starliner crew,” Stich added later.

SpaceX’s Dragon crew capsule “Endeavour” seen from the International Space Station on May 2, 2024.

Boeing and NASA on July 3 began testing the spacecraft’s thruster technology back on the ground in White Sands, New Mexico, aiming to replicate an issue that caused as many as five of Calypso’s thrusters to shut down when the spacecraft was maneuvering to dock with the ISS. The ground testing is being done to “make sure that with all these pulses and all the heat we’re putting into it, that it doesn’t cause any damage to the thruster,” Stich said.
Stich noted that an “end of July” return for Starliner is “optimistically” based on completing the testing. Boeing and NASA teams in White Sands are conducting inspections of the test thruster over this next week.
But “so far we’ve not been able to replicate the temperatures that we saw in flight,” Boeing’s Mark Nappi, vice president of the Starliner program, said during the press conference.
“What we’re trying to do with this testing is fill in some gaps because … what we’re trying to do is understand if the thrusters are performing [as expected], then we will be able to undock and just return. If the thrusters were somehow damaged, then what would we do differently?” Nappi said.
“We don’t believe that we have damaged thrusters, but again, we want to fill in the blanks and run this test to assure ourselves,” Nappi added.

Boeing’s Starliner spacecraft is pictured docked to the International Space Station orbiting above Egypt’s Mediterranean coast on June 13, 2024.

Wilmore and Williams, speaking to press from the ISS, both expressed confidence about returning on Starliner.
“We trust that the tests that we’re doing are the ones that we need to do to get the right answers to give us the data that we need to come back,” Wilmore said.
Starliner was once seen as a competitor to SpaceX’s Dragon, which has made 12 crewed trips to the ISS over the past four years. However, various setbacks and delays have steadily slipped Starliner into a secondary position for NASA, with the agency planning to have SpaceX and Boeing fly astronauts on alternating flights.
The Starliner crew flight test represents a final major step before NASA certifies Boeing to fly crew on operational, six-month missions beginning as soon as February.

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Costco is hiking its annual membership fees in the U.S. and Canada by $5, and raising the cost of its higher-tier membership by $10.
It is the first increase since 2017.
Costco relies on the fees to keep prices low as it competes with rivals such as Sam’s Club and BJ’s.

Customers exit a Costco store in Teterboro, New Jersey, on June 28, 2023.
Kena Betancur | Corbis News | Getty Images

You will soon have to pay more if you want to shop at Costco.
The membership-based warehouse club said Wednesday that it will increase its membership fee by $5 in the U.S. and Canada as of Sept. 1. That is an increase to $65 from $60 for annual memberships. Its higher-tier plan, called “Executive Membership,” will increase to $130 a year from $120.

Costco said the fee increases would affect about 52 million memberships, a little over half of which are executive memberships.
Shares rose about 2% in extended trading Wednesday.
It marks Costco’s first membership rate increase since June 2017. On average, the company has raised rates roughly every five and a half years, which would have put Costco on track to raise the fee in late 2022 or early 2023.
However, Costco held off on raising fees prior to now. In interviews with CNBC, CEO Craig Jelinek previously said it was not the right time as consumers dealt with high inflation. The company’s Chief Financial Officer Richard Galanti made similar comments on prior earnings calls.
Costco relies on membership fees to drive most of its revenue and help keep merchandise prices low. Its rival, Walmart-owned Sam’s Club, hiked its own membership fee in 2022 for the first time in nine years. Yet, even after the fee bump, a Sam’s Club membership was cheaper, at $50 for club members and $110 for members of its higher-tier level, “Plus,” on an annual basis. At BJ’s Wholesale, annual membership fees are $55 and $110, for club members and its own higher tier, respectively.
Costco said it stepped up enforcement last year to make sure shoppers were not using other members’ cards. It added an extra check for memberships in self-checkout aisles. The moves were reminiscent of Netflix, which has also cracked down on people who use its service without paying.

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