The FTC should remove Lina Khan and two commissioners from the drug middlemen case, according to CVS and UnitedHealth.

• The drug middlemen are being sued by CVS Health and UnitedHealth Group for inflating insulin costs for Americans, and the FTC Chairwoman Lina Khan and two other commissioners are being demanded to recuse themselves from the lawsuit.
• The pharmacy benefit managers were accused by the companies of having serious bias against them, as evidenced by the commissioners' public statements.
• Last month, the FTC filed a lawsuit against the three largest PBMs, namely CVS Health's Caremark, UnitedHealth Group's Optum Rx, and Cigna's Express Scripts.

The Federal Trade Commission Chair Lina Khan and two other commissioners have recused themselves from a lawsuit alleging that the companies and other drug middlemen have inflated insulin costs for Americans while increasing their profits.

On Tuesday night, CVS and UnitedHealth filed separate motions with the FTC, alleging that all three commissioners have a history of making public statements that demonstrate a "serious bias" against the companies' pharmacy benefit managers.

The companies accused Khan, Commissioners Alvaro Bedoya and Rebecca Kelly Slaughter, of incorrectly asserting that PBMs are "price gougers" that hold significant control over the pricing and access to drugs like insulin. CVS said those statements demonstrate that the commissioners have "prejudged this matter," so their participation in the case "violates due process."

The Three Commissioners would meet the standard of 'blatant bias' if the opposite of 'complete fairness' is 'blatant bias,' as stated in a 23-page motion by CVS.

If a judge made biased remarks about a litigant at the beginning of a lawsuit, they would need to recuse immediately, according to UnitedHealth's 17-page motion.

On Wednesday, the FTC did not provide a comment on the motion when requested by CNBC.

Corporate giants such as and have attempted to disqualify Khan from past cases and investigations, but she has remained steadfast in her commitment to objectivity.

The three largest Pharmaceutical Benefit Managers (PBMs), namely CVS Health's Caremark, Optum Rx of UnitedHealth Group, and Express Scripts, which are all owned or linked to health insurers, have been sued by the Federal Trade Commission (FTC) last month. These PBMs collectively manage approximately 80% of the nation's prescriptions.

Since 2022, the FTC has been probing PBMs' role in insulin pricing and their function in the U.S. drug supply chain, which includes negotiating rebates with manufacturers on behalf of insurers, establishing lists of preferred medications covered by health plans, and compensating pharmacies for prescriptions.

The lawsuit brought forth by the agency claims that the three PBMs have established a "distorted" system that prioritizes high rebates from manufacturers, resulting in "artificially inflated" insulin list prices. Additionally, the suit alleges that PBMs prefer high-list-price insulins even when lower-list-price alternatives become available.

The lawsuit involves each PBM's associated GPO, which facilitates drug purchases for healthcare providers. Zinc Health Services is the GPO for Caremark, Emisar Pharma acts as the GPO for OptumRx, and Ascent Health Services is the GPO for Cigna.

Despite facing several challenges, including a lawsuit and declining stock prices, CVS continues to struggle with rising medical costs and pharmacy reimbursement pressures.

Caremark's position in the event of a potential split between CVS's insurer and retail pharmacies is uncertain, as CVS has enlisted advisors for a strategic review of its business.

In the motion Tuesday, CVS claimed that Khan has consistently criticized PBMs throughout her career. Specifically, the company pointed to a 2022 statement in which Khan stated that PBMs "effectively dictate which medications are prescribed, which pharmacies patients can use, and the amount patients will pay at the pharmacy counter."

Slaughter and Bedoya have different opinions on the role of PBMs in the pharmaceutical industry. Slaughter believes that PBMs engage in "disturbing," "unacceptable," and "rotten" rebating practices that create "competitive distortions in pharmaceutical markets." On the other hand, Bedoya suggests that PBMs are not entirely to blame for insulin price increases, as they also demand rebates from pharmaceutical companies.

The three commissioners' prior statements regarding Caremark and other PBMs were deemed "incorrect assertions" by CVS.

The FTC investigation into PBMs was also criticized by CVS, who claimed that the three commissioners attended private events to raise funds for anti-PBM lobbying groups. These events were described as "bloodsuckers" and "vampires" by the organizers, according to CVS's motion.

The Biden administration and lawmakers are pushing for greater transparency in PBMs' business practices as many patients struggle to afford prescription drugs, which cost Americans an average of two to three times more than patients in other developed nations.