The Federal Trade Commission said Friday that it is suing three drug middlemen, accusing them of inflating insulin prices.

The FTC accused the ‘Big Three’ pharmacy benefit managers (PBMs) — UnitedHealth Group’s Optum Rx, CVS Health’s Caremark and Cigna’s Express Scripts — of ‘engaging in anticompetitive and unfair rebating practices that have artificially inflated the list price of insulin drugs, impaired patients’ access to lower list price products, and shifted the cost of high insulin list prices to vulnerable patients.’ Around 8 million Americans rely on insulin in the U.S., per the FTC.

PBMs work with insurance companies to negotiate discounted prices from drug companies in exchange for including the drugs in their coverage. In theory, they are supposed to save patients money.

Also included in the lawsuit are the PBMs’ group purchasing organizations, which include Zinc Health Services, Ascent Health Services and Emisar Pharma Services.

The ‘Big Three’ oversee around 80% of all prescription drug plans in the U.S., according to the complaint, which alleges that they created a rebate system prioritizing high rebates from drug manufacturers, which led to the inflated insulin prices.

‘This perverse system results in billions of dollars in rebates and fees for the PBMs and their health plan sponsor clients — but does so at the expense of certain vulnerable diabetic patients who must pay significantly more out-of-pocket for their critical medications,’ the FTC said in a news release.

In a statement, CVS Caremark said the FTC’s allegations are ‘simply wrong’ and blamed drug manufacturers for hiking up the price of the drugs.

‘CVS Caremark has led the way in driving down the cost of insulin for all patients: insured, uninsured, and underinsured,’ the company said. ‘Our members on average pay less than $25, far below list prices and far below the Biden Administration’s $35 cap. Further, we also provide access to $25 insulin to every American, whether insured or uninsured, through our ReducedRx program at every one of our 67,000 network pharmacies and more than 9,000 CVS pharmacies.’

Cigna’s Chief Legal Officer, Andrea Nelson, said the FTC’s lawsuit continues its ‘troubling pattern’ of ‘unsubstantiated and ideologically driven attacks on pharmacy benefit managers,’ including a report the commission released in July accusing the PBMs of hiking up the drug prices. Cigna filed a lawsuit against the FTC on Tuesday requesting that they withdraw the report.

‘Once again, the FTC — a government agency funded by taxpayer dollars — is proving that the FTC does not understand drug pricing and instead is choosing to ignore the facts and score political points, rather than focus on its duty to protect consumers,’ Nelson said in a statement. ‘The fact is that in the unlikely event the FTC succeeds in its suit and forces PBMs to include drugs on formulary even if they have higher net costs for plan sponsors — and regardless of whether they are clinically necessary — the FTC will drive drug prices higher in this country. This will hurt consumers and those who provide their prescription drug benefits — including employers, labor unions, and the federal government itself.’

UnitedHealth Group did not immediately respond to requests for comment.

The FTC said that insulin medication was previously more affordable, using the example of Humalog, a medication manufactured by Eli Lilly, that cost about $21 in 1999. The drug was priced at $274 in 2017, as a result of the PBMs rebate system strategy, the FTC said.

‘Millions of Americans with diabetes need insulin to survive, yet for many of these vulnerable patients, their insulin drug costs have skyrocketed over the past decade thanks in part to powerful PBMs and their greed,’ said Rahul Rao, the deputy director of the FTC’s Bureau of Competition.

It’s not only the PBMs that are responsible for the skyrocketing prices, the FTC said, but also drug manufacturers like Eli Lilly and Novo Nordisk, which the commission says “should be on notice” because they may be sued in the future.

In a statement, White House Press Secretary Karine Jean-Pierre said they do not have any comment on the lawsuit, but ‘have made clear that no one should pay higher prices because of corporate greed.’

‘The President and Vice President have been taking on profiteering by Big Pharma and pharmaceutical middle-men to lower the costs of healthcare and prescription drugs—from giving Medicare the power to negotiate lower drug prices, to lowering prices for insulin, inhalers, EpiPens and hearing aids by increasing competition,’ Jean-Pierre said. 

National Community Pharmacists Association supported the FTC’s lawsuit against the PBMs in a statement released Friday.

‘One of the many ways that PBMs manipulate the system against patients, taxpayers, and small pharmacies is the rebate game,’ said B. Douglas Hoey, the association’s chief executive officer. ‘The PBMs determine which drugs are covered by health insurance plans. They get bigger rebates for the most expensive drugs. Naturally, the most expensive drugs end up on the formularies even when there are cheaper alternatives. Patients end up paying more. Employers end up paying more. Taxpayers end up paying more. And more small business pharmacies are driven out of business. The rebates create a powerful incentive for higher drug prices, which is completely upside-down.’

In July, Democratic and Republican lawmakers blamed executives from Caremark, Express Scripts and Optum Rx for sky-high prescription drug prices in the U.S. during an oversight committee hearing.

“On one hand we have PBMs claiming to reduce prescription drug prices, and on the other hand we have the Federal Trade Commission, we have major media outlets like The New York Times and we have at least eight different attorneys generals, Democrats and Republicans, who all say PBMs are inflating drug costs,” Rep. Raja Krishnamoorthi, D-Ill., said. 

The committee launched an investigation in March 2023 into PBMs’ role in the rise in health care costs. The lawsuit also comes as states — most recently Vermont — have sued PBMs, alleging they drive up drug costs.

During a recent event celebrating Foot Locker’s 50th anniversary in New York City, it was hard to imagine that the legacy sneaker chain was appearing on bankruptcy watch lists as recently as March.

Grammy-nominated rapper Coi Leray was there to celebrate the company with a special performance of her hit song “Players” as influencers, journalists and handpicked members of the company’s revamped loyalty program sipped on lavender margaritas and champagne cocktails.

Employees — and not just those in the glare of the company’s PR team — gushed about CEO Mary Dillon as Adidas staffers celebrated the company’s new store design, which showcases individual brands instead of mixing them on nondescript shoe walls. 

Foot Locker turns 50 while on a bit of an upswing two years into Dillon’s tenure as CEO. Last month, it released fiscal second-quarter results and full-year guidance that beat expectations, as comparable sales grew for the first time in six quarters.

As Foot Locker revamps its sprawling store footprint, and perhaps benefits from some good timing, it’s making strides in winning back its critical brand partners like Nike and Adidas, the latter of which co-hosted the Monday night party and helped secure Leray’s performance. 

“Our last quarter was a really good indication that the hard work that we’ve been putting into the Lace Up plan is working, and that makes me feel really, really great, because I really see the next 50 years of growth for Foot Locker and our future,” Dillon told CNBC in an interview, referencing the company’s turnaround plan. “I really think that there’s layers of category growth that we can drive by just making sneakers that much more inclusive, that much more fun, that much more easy to access.”

But as Foot Locker stares down the next 50 years, the company is still at a crossroads and must answer some fundamental questions: can it once again be the market leader in sneakers, and can it not just survive, but thrive, as brands rely less and less on wholesalers?

“With the combination of more direct to consumer from the brands, the deepening of specialists like [Dick’s Sporting Goods], the incursion of JD Sports, Foot Locker still looks risky,” said Neil Saunders, a retail analyst and managing director of GlobalData. “In some ways, they’re just a sort of distributor of everyone else’s products.”

Dick’s has a big private-label business and sells other categories like sporting goods, while JD Sports has strong loyalty programs and a robust fashion business, he said.

“Whereas Foot Locker looks vulnerable because it just doesn’t have all these other strings to its bows,” said Saunders. “The truth is that although they’re getting better, there is still this question: Do we need this specialist sneaker retailer?” 

Foot Locker can be traced back to the legendary retailer Frank Winfield Woolworth, whose namesake company branched into footwear in the 1960s and later opened the first Foot Locker in City of Industry, California, in September 1974. 

From the beginning, Foot Locker was a mall retailer. Over the next two decades, it opened thousands of stores in malls across the U.S. and abroad. 

By the turn of the century, it was the world’s largest retailer of athletic footwear and apparel, with a 20% market share in the U.S., according to a 2002 Forbes report. It was the primary place to buy Nike sneakers and was responsible for 26% to 28% of Nike’s total domestic revenue. Nike accounted for more than half of Foot Locker’s total sales at the time.

“It was a simpler retail world. I think in the years that they were initially really experiencing strong growth, it was as simple as being in the mall, having a large mall footprint and having the right brands and they had that footprint,” said Janine Stichter, a retail analyst and managing director at BTIG, who has been covering the retail industry since 2008. “They were the No. 1 partner of Nike. Nike, at the time, was strong and growing, and I think they were really viewed as like the destination in an environment that was a lot less competitive.” 

When Foot Locker’s chief commercial officer, Frank Bracken, joined the company in 2010, the retailer’s relationship with Nike was poised to get even stronger. By the end of the decade, 75% of the products Foot Locker sold were from Nike.

“This was [pre-direct-to-consumer], Foot Locker was definitely ‘most favored nations’ with most of our brand partners at that time, Nike was about to go on a pretty epic run alongside Jordan, and so I actually joined at a really good time,” Bracken said in an interview.

Bracken recalled how from 2012 to about 2018, Foot Locker’s stock rose to record highs as revenue grew at a mid-to-high single-digit compound annual growth rate. But as the 2020s neared, the company got “complacent” and began taking its position as the market leader in sneakers “for granted,” said Bracken. 

″[We] got some weak signals about where the industry was headed, from our partners and from competition, and then Covid, you know, paralyzed everybody momentarily and I think we lost some time, candidly, during Covid,” he said. “Competition used it as an opportunity to invest in technology and capability and the business, and maybe we probably stood a little bit too still at that point in time.” 

As consumers moved online and away from malls, Foot Locker did too little to update its e-commerce capabilities and its real estate footprint, said Bracken. At the same time, competitors were getting bigger and savvier, adjusting their real estate strategies as malls across America sputtered and died. 

In North America, the company let its banners — Foot Locker, Footaction and Champs Sports — overlap too heavily with each other in terms of assortment, location and marketing, and brands “started to take note of that,” said Bracken.

At the end of 2021, Foot Locker was winding down its Footaction business and had acquired WSS — an off-mall athletic apparel retailer that caters to the Hispanic community — to help differentiate itself from competitors.

But by then, it was too late.

Nike, carrying out a new strategy to cut off wholesalers and sell directly to consumers through its own websites and stores, had started reducing the number of sneakers it was selling to Foot Locker, the company said on an earnings call in February 2022. It chose instead to reserve its best products for Foot Locker’s primary competitors: Dick’s and JD Sports. 

For a company that relied almost exclusively on Nike, the change was devastating and posed an existential threat. By the end of fiscal 2022, comparable sales had fallen 7.2% in North America. The declines would only mount in the quarters to come. 

When Dillon, the former CEO of Ulta Beauty, took the helm of Foot Locker in September 2022, Wall Street breathed a collective sigh of relief. Highly regarded among peers, Dillon was known for her ability to win over brands, and appeared to have the necessary chops to turn Foot Locker around. 

“In a way, she soothed investors … they know that she can deliver and they know that she understands retail and the sector and she’s got good operation control and all the rest of it,” said Saunders from GlobalData. “That’s obviously starting to come through a little bit more now.”

In her first major public event as CEO, Dillon hosted an investor day last March where she touted a revitalized relationship with Nike. She pledged the “fruits of our renewed commitment to one another” would begin to show up in results by the end of the year. 

She outlined her Lace Up turnaround strategy, which focused on four key pillars: better marketing, a new real estate plan, a revamped loyalty program and an emphasis on online sales. 

But as the year wore on, the macroeconomic picture worsened, which hit Foot Locker hard because about half of its customers are considered low income. The company went on to cut its guidance twice, suspend its dividend and delay a key financial target that it outlined at its investor day. 

“As a CEO, it’s hard to go out and make a commitment and have to change it, but because I believe so much in the plan and where we’re heading, I felt confident that it was the right thing to do,” said Dillon. “Now I believe we’ve kind of worked past that.”

Beyond the macro situation, the company likely underestimated the challenges it was facing, and how much the Nike breakup would hurt its business, Saunders and Stichter said. 

“You don’t really know until you do it how impactful that’s going to be and I think that they thought they’d be able to offset more of that loss more quickly,” said Stichter. 

While Foot Locker’s fiscal 2023 turned out worse than it originally anticipated, the company is seeing some of its turnaround efforts start to take hold. While Nike is still its biggest partner, it’s focusing more on other brands, such as upstarts like Hoka and On and legacy incumbents like Birkenstock and Ugg.  

Online sales are growing. Foot Locker plans to relaunch its mobile app at the end of the year, and it recently unveiled its revamped loyalty program FLX, which allows customers to earn discounts, access to product launches and perks like free returns. 

“We know that we only capture a fraction of this annual sneaker spend that our existing customers spend on sneakers,” said Kim Waldmann, Foot Locker’s chief customer officer. ”[FLX] isn’t necessarily about getting you to buy 10 more sneakers per year, it’s an opportunity for us to drive share of wallet consolidation by the fact that you’re getting value back in shopping with us.” 

When Waldmann started in the role last year, she learned from consumer research that customers loved having access to a wide variety of brands at Foot Locker’s stores and enjoyed the product knowledge that its employees, known as “Stripers,” had. 

“The thing that they wanted to see more from us is like we’re just not top of mind. A lot of consumers just hadn’t seen us in a while,” said Waldmann. “And I think that was really the opportunity to take what is an iconic brand and make it influential and top of mind again, and that’s really the work that we’ve been doing.” 

The company is marketing more toward women and has partnered with stars such as Leray, who was part of Foot Locker’s spring style and trend campaign. 

Perhaps most critically, Foot Locker is finally doing the work necessary to overhaul its aging store fleet, which is responsible for about 80% of its sales. Since Dillon took over, she’s closed around 500 stores, opened about 200 new shops and remodeled or relocated another 200 or so doors. Earlier this year, Foot Locker unveiled its “reimagined” store concept and its plans to move away from its traditional format, which tends to be two walls of shoes with a middle section used for trying on sneakers. 

As more and more brands move away from wholesalers in favor of their own stores and website, the strategy change was critical to Foot Locker’s survival. Its business does not work if it doesn’t have the support of its brand partners, which want to ensure that their assortments are showcased individually — not mixed together with competitors. 

“When you talk to a company like On they’re like, yeah, we’re selective about who we sell to, we don’t want to be just another shoe on the wall,” said Stichter. “They’re really investing behind putting more signage and just investing in the displays … that’s what makes the brands want to work with them.” 

Since May, Foot Locker has brought the new design concept to at least 80 of its stores, which it says have better comparable sales and margins compared with the balance of the chain. The company is working to refresh two-thirds of its global Foot Locker and Kids Foot Locker doors by the end of 2025, and said 40% of its North American footprint is now off-mall. 

The new store approach couldn’t come at a better time for Foot Locker. Over the last year, Nike has begun to walk back its direct selling strategy after acknowledging that it went too far in cutting out wholesalers. 

“Nike is our largest partner and they’re the largest in the industry so for us, it’s also about, how do we make sure that we have a really terrific long-term growth relationship with Nike? And I’m proud about the fact that we’re going back to growth [with Nike] starting in the fourth quarter of this year,” said Dillon. “Also … at the same time, Nike has been very public about the role of retailers and the importance of that for them as well so maybe it was good timing, right?” 

As Foot Locker looks ahead to the next 50 years, its ability to survive is still up for debate. Nike is at a low point and is cozying back up to the wholesale partners, but when it rebounds, will it cut off those retailers once again? 

Absent a robust private-label business, Foot Locker’s success is also highly dependent on the performance of its brand partners, which leaves it with less control over its own destiny than other retailers that have recently made big comebacks, such as Abercrombie & Fitch. 

If Nike has a major product launch, it can be a boon for Foot Locker’s sales, but if innovation dries up, Foot Locker will suffer. It has found itself in a similar quandary facing other multi-brand retailers, such as Macy’s, which has also struggled to find itself in a post-mall world. 

When asked if Foot Locker can survive another 50 years, GlobalData’s Saunders said the company is the “most at risk of extinction” of its peers. Stichter disagreed. 

“One thing we’ve learned is that consumers really do want a multi-brand experience. There are people who go to Nike.com or Adidas.com but people really like having that selection, having the service,” said Stichter. “So there is a reason for a concept like Foot Locker to exist. I think it all just depends on, can they execute well and be one of the preferred places for consumers who are looking for choice.”

RENTON, Wash. — Cash-strapped Boeing is facing mounting costs from an ongoing machinist strike as workers push for higher pay. A failure to get a deal done could be even more expensive.

In the shadow of a factory outside Seattle where Boeing makes its best-selling planes, picketing Boeing machinists told CNBC they have saved up money and have taken or are considering taking side jobs in landscaping, furniture moving or warehouse work to make ends meet if the strike is goes on much longer.

The work stoppage by Boeing’s factory workers in the Pacific Northwest just entered its second week. The financial cost of the strike on Boeing depends on how long it lasts, though ratings agencies have warned that the company could face a downgrade if it drags on too long.

That would add to the borrowing costs of the company, already $60 billion in debt. Boeing has burned through about $8 billion so far this year in the wake of a near-catastrophic door plug blowout from one of its 737 Max planes in January.

Boeing hasn’t turned an annual profit since 2018, and its new CEO Kelly Ortberg is trying to restore the company’s reputation after months of manufacturing crises that have slowed deliveries to customers, depriving it of cash.

At the local union office in Renton, machinists were preparing for what may become a lengthy strike: Union members carried in large pallets of bottled water, while someone mixed a giant tuna salad in the kitchen to make sandwiches for workers. Union vans visited demonstration sites around Renton offering transportation to bathroom breaks for workers on picket duty. Burn barrels provided heat for chilly overnight pickets.

Many workers spoke of their love for their jobs but fretted about the high cost of living in the Seattle area, where the majority of Boeing’s aircraft are made.

The median home price in Washington state increased about 142% to $613,000 as of 2023, from $253,800 a decade earlier, according to the state’s Office of Financial Management. That outpaces the roughly 55% increase nationally over that period, according to data from the Federal Reserve Bank of St. Louis.

“We can’t afford [to own] a home,” said Jake Meyer, a Boeing mechanic who said he will start driving for a food delivery service during the strike and is looking at picking up odd jobs such as moving furniture. Meyer said although he’s striking for higher pay from Boeing, he enjoys the job of building airplanes.

“I take pride in my work,” he said.

Another Boeing machinist said he has been saving for months, forgoing things such as restaurants and paying three months of mortgage payments early.

“I can last as long as it takes,” said the worker, who spoke on the condition of anonymity.

More than 30,000 Boeing machinists walked off the job at midnight Sept. 13 after turning down a tentative labor deal in a nearly 95% vote — 96% voted in favor of a strike. They received their last paychecks Thursday, and health benefits are set to end on Sept. 30. A strike fund from the union will soon give them $250 a week.

The strike is costing Boeing some $50 million a day, according to estimates by Bank of America aerospace analyst Ron Epstein. The strike halted production of most of Boeing’s aircraft, and that is rippling out to the aerospace giant’s vast network of suppliers, some of which have already been told to halt shipments. Boeing is still making 787 Dreamliners at its non-union factory in South Carolina.

The battle pits a struggling Boeing against a workforce seeking wage increases and other improvements. Boeing’s most recent offer included 25% general wage increases over a four-year deal and was endorsed by the machinists union, the International Association of Machinists and Aerospace Workers District 751.

Workers said they were looking for wage increases closer to the 40% that the union had proposed as well as annual bonuses and a restoration of pensions lost more than a decade ago.

Boeing and the union were at the negotiation table this week, but both Boeing and union negotiators have said they were disappointed with the lack of progress.

“We continue to prioritize the issues you defined in the most recent survey,” union negotiators wrote to members Wednesday, “yet we are deeply concerned that the company has not addressed your top concerns. No meaningful progress was made during today’s talks.”

Ortberg, who is just six weeks on the job, announced temporary furloughs this week of tens of thousands of Boeing staff, including managers and executives, on the heels of a hiring freeze and other cost-cutting measures announced this week.

“During mediation with the union this week, we continued our good faith efforts to engage the union’s bargaining committee in meaningful negotiations to address the feedback we’ve heard from our team,” Ortberg said in a note to staff Friday.

“While we are disappointed the discussions didn’t lead to more progress, we remain very committed to reaching an agreement as soon as possible that recognizes the hard work of our employees and ends the work stoppage in the Pacific Northwest,” Ortberg wrote. 

The strike, which includes Boeing machinists in the Seattle area, Oregon and a few other locations, is just the latest in a series of labor battles in recent years that has included actors, autoworkers, port workers and airline employees, all of which have won raises after strikes or strike threats.

The Biden administration has encouraged Boeing and the union to reach a deal.

“I do believe that both parties want to get to a resolution here, and hoping to see one that makes sense for the workers and it works for a company that really needs to find its way forward on so many fronts,” Transportation Secretary Pete Buttigieg told CNBC’s “Squawk Box” on Thursday.

Boeing is facing a tight labor market. During the last strike, in 2008, which lasted less than two months, the company was in better financial shape, and there was less job competition in the area.

One Boeing supplier told CNBC that furloughing or laying off workers would cause problems for months down the road because it takes so long to train staff on such technical and detailed work.

During the pandemic, Boeing and its suppliers shed thousands of workers. They’ve since struggled to hire and train workers in time for the resurgence in air travel and aircraft demand.

“You’re in an environment where skilled, technical labor is hard to get right now, particularly in aerospace and defense,” said Bank of America’s Epstein. “So what do you do to not only retain them but attract them? If they really want a pension, maybe that gives you a competitive advantage over people who are trying to attract talent.”