Will Trump’s FTC Rein In Lina Khan’s Abuses?

N ine months have passed since Lina Khan, the Biden-appointed chairwoman of the Federal Trade Commission, left office. But the damage of her legacy lives on, and countless companies are still recovering from the havoc she wreaked.

Lawsuits filed during her tenure that have not already failed are continuing to make their way through the court system. One of those lawsuits, filed in September 2024, deals with a complex set of issues involving insulin prices and pharmacy benefit managers (PBMs) — the companies that employers hire to negotiate and reduce drug prices up the pharmaceutical chain.

It is true that some PBMs have engaged in less than shining business practices over the years, exploiting their market power. Such anticompetitive behavior should be resolved by the FTC, which is now headed by Trump nominee Andrew Ferguson, quickly and forcefully. However, in dealing with these lagging cases, the commission should refocus on what seems to have been largely ignored when, under Khan, it filed the PBM case: consumer welfare, or what credible evidence tells us about whether consumers have been harmed.

It’s useful to remember that Khan moved the agency in a radically new direction. A report published by the House Judiciary Committee last year described her as having “sought to make antitrust enforcement about her values that ignore consumer interests, economics, and a duty to faithfully execute the law as a prosecutor.” That often meant going to war with any company that she deemed to simply be “too big,” despite having no evidence that the company had caused harm to consumers. Several rulings by the FTC during her tenure were later challenged in the courts and overturned.

Emblematic of Khan’s tenure was an FTC vote taken just days after she took office. She and two other Democratic-appointed commissioners voted to rescind a policy adopted in 2015 that prioritized “consumer welfare” when choosing whether to challenge an act or practice as an unfair method of competition.

Given this explicit break with a principle that had guided the FTC for years, it’s not a surprise that Khan and her sympathizers on the commission took positions that were far outside the mainstream of legal and economic thinking — and didn’t consider a basic issue: How do consumers fare?

The handling of the PBM case is a good illustration of the FTC gone rogue. Whatever your opinions are about PBMs, if an antitrust matter is brought against them, consumer harm needs to be clearly demonstrated. The FTC’s complaint focused on list prices rather than transaction prices for insulin, without even referencing a key driver of increased prices and spending on insulin: increased demand. During the period the FTC examined (2012–22), there was a 20 percent increase in the incidence of type 2 diabetes, which drives insulin demand.

But it’s also striking that the entire premise of the case — higher insulin list and transaction prices — had been rendered moot by the time the case was filed. Between 2019 and the middle of 2024, insulin prices had declined 42 percent. The resulting price — $0.19 per insulin unit — was “the lowest average recorded in a decade,” according to an analysis by GoodRx, a company that tracks prescription drug prices and offers discounts on medications.

The price hikes cited by the FTC also ignore the PBM-negotiated rebates, which could be up to 98 percent for clients such as insurers and employers. What’s more, because of price cuts, net sales of insulin after rebates and other discounts fell about 40 percent from 2012 to 2019 (from $8 billion to $5 billion), according to research published in 2023 in the leading Journal of the American Medical Association.

Had the FTC looked more carefully into the reason for the fall in prices (assuming it had an interest in doing so), it would have found a number of explanations — such as the more frequent use of generics but also the fact that PBMs almost certainly played a part by using their buying power to put downward pressure on prices. In March 2023, Eli Lilly announced a 70 percent reduction in the price of its most common insulins and placed a $35 ceiling on out-of-pocket cost for the medications. Sanofi made a similar announcement 15 days later.

The FTC complaint conceded that there have been “recent list price decreases on some insulin products.” It tried to downplay those declines by saying, “The list prices of other insulin products remain high” and “the list prices — and rebates — associated with product categories beyond just insulin have dramatically increased in recent years.” But no evidence of actual consumer harm caused by the PBMs is provided to support the FTC’s assertions.

And the commission avoided an important question necessary to put the case in context — how much do Americans pay for pharmaceuticals like insulin relative to what people pay for them in high-income countries that don’t use PBMs? In fact, 93 percent of U.S. drug prescriptions are generic — and they tend to be priced 80–85 percent lower than brand-name drugs. (Those brand-name drugs account for the other 7 percent of prescriptions, and they get all the attention, as they cost about three times as much as they do in other countries.) Overall, U.S. prescriptions filled through Medicare and Medicaid are 15 percent less expensive than prescriptions filled in other high-income countries.

Once insulin prices plunged, the Biden FTC should have declared victory and withdrawn the PBM complaint, focusing instead on the problematic practices — ones that can be substantiated through empirical analysis — that a handful of PBMs have undertaken. The new, Ferguson-led FTC has an opportunity to undo the damage done by Khan and to restore the principle that should guide the commission’s deliberations: consumer welfare.