- A group of independent pharmacies is suing Cigna-owned Express Scripts for allegedly colluding with rival pharmacy benefit manager Prime Therapeutics.
- The proposed class action lawsuit filed in Wisconsin last week accuses Express Scripts — one of the largest PBMs in the U.S. — of inking a three-year deal with Prime in 2019 to fix reimbursement rates and fees, in violation of the Sherman Act.
- Prime previously collected lower fees from pharmacies and reimbursed them more for dispensing drugs than Express Scripts, because of its smaller market size. But after the deal, the PBM charged the same transaction fees and reimbursed at the same level as Express Scripts, according to the suit.
PBMs are drug middlemen that manage pharmacy benefits for health insurers. Among other duties, the companies contract with pharmacies to dispense drugs to insurers’ members and reimburse pharmacies an agreed-upon rate. Pharmacies also pay PBMs transaction fees for claims processing services.
PBMs have faced criticism for shunting dispensing volume to their own pharmacies, along with low reimbursement rates that threaten to put some independent pharmacies out of business.
Now, four independent pharmacies — two in Wisconsin, one in New Jersey and one in Minnesota — are also accusing Express Scripts of collusion through an agreement it notched with Prime in 2019.
The lawsuit alleges that the agreement “allows Prime to borrow [Express Scripts’] substantial market power to impose lower Reimbursement Rates and higher Transaction Fees on the plaintiffs and the other retail pharmacies,” and retain higher profits as a result, the suit alleges.
Express Scripts covers 100 million members in the U.S., while Prime covers 33 million. The two entered into a partnership four years ago in which Express Scripts handles rebate negotiations with drugmakers, along with retail pharmacy network contracting for most of Prime’s business.
The lawsuit argues that effectively nothing changed for pharmacies following the agreement — they still deal with Prime as they did before — except now Prime charges them the higher fees and reimburses at the lower level set by Express Scripts.
“The Agreement does not, and is not intended to, achieve any efficiencies or economies of scale or procompetitive effects in the relevant markets, and the assertion of any such efficiencies or procompetitive effects by either Prime or [Express Scripts] is pretextual,” the suit alleges. “The Agreement is simply a naked restraint on price competition.”
Express Scripts called the allegations “baseless” in a statement to Healthcare Dive.
Prime is not named as a defendant in the suit.
PBMs are facing ongoing litigation against business practices critics say are confusing at best and illegal at worst. CVS Caremark was sued in late September by an independent pharmacy also taking issue with expensive fees.
At the federal level, the Federal Trade Commission and a number of other government bodies are currently investigating the companies, while bipartisan legislation that hopes to inject more transparency into PBM arrangements could be voted on in Congress later this year.