July 10 (Reuters) - The U.S. Federal Trade Commission is

planning to sue UnitedHealth ( UNH ), Cigna ( CI ) and CVS

Health ( CVS ) - the three largest pharmacy-benefit managers

- over their tactics for negotiating prices for drugs including

insulin, a person familiar with the matter told Reuters on

Wednesday.

Pharmacy benefit managers, or PBMs, act as middlemen between

drug companies and consumers. They negotiate fees and

volume-based discounts, known as rebates, with drug

manufacturers, create lists of medications that are covered by

insurance, and reimburse pharmacies for prescriptions.

The three biggest PBMs are UnitedHealth's ( UNH ) Optum unit, CVS

Health's ( CVS ) CVS Caremark and Cigna's ( CI ) Express Scripts.

"Any action that limits the use of these PBM negotiating

tools would reward the pharmaceutical industry and return the

market to a broken state, leaving American businesses and

patients at the mercy of the prices drugmakers set," a CVS

spokesperson said, adding that the company will defend the use

of these tools vigorously.

UnitedHealth ( UNH ) declined to comment, while Cigna ( CI ) did not

immediately respond to a Reuters request for comment.

The Wall Street Journal first reported the FTC's move.

The FTC is also looking at drugmakers as part of the

insulin probe, the source said. The three largest insulin makers

include Sanofi, Novo Nordisk and Eli Lilly ( LLY )

.