Michigan Attorney General Dana Nessel filed a lawsuit against Express Scripts and Prime Therapeutics last week, claiming the two pharmacy benefit managers allegedly engaged in anticompetitive conduct that harmed independent pharmacies in the state.
According to the lawsuit, the PBMs allegedly formed an unlawful agreement that suppressed reimbursement rates to independent pharmacies, enabling them to pull in profits at the expense of independent pharmacies.
This agreement, said Nessel, violated antitrust laws and contributed to pharmacy deserts across the state. Half of all neighborhoods in Detroit classify as deserts, the lawsuit claimed.
WHAT'S THE IMPACT
PBMs serve as intermediaries between insurance providers, drug manufacturers and pharmacies; they're tasked with reducing the amount that insurers pay to pharmacies when individuals fill prescriptions.
The lawsuit alleges that in December 2019, Express Scripts and Prime Therapeutics entered into an agreement for the latter to adopt Express Scripts' lower reimbursement rates in exchange for accessing its buying power and pharmacy network, while paying Express Scripts administrative fees.
As a result, independent pharmacies – those not part of the PBMs' corporate families – allegedly receive less money for filling prescriptions. Sometimes, the reimbursements are so low that pharmacies allegedly pay more to dispense medications to patients than they get back from insurers, the lawsuit claimed.
Nessel argued these actions violate the Sherman Antitrust Act, the Michigan Antitrust Reform Act, as well as public nuisance laws. The lawsuit seeks to terminate the agreement between the two PBMs.
"Michigan residents should not have to drive 45 minutes, or sometimes even farther, to pick up the insulin, heart medication, or antibiotics they need," said Nessel in a statement. "Yet the unlawful, anticompetitive agreement that the lawsuit alleges has handed these PBMs unprecedented control over which pharmacies receive medication, how quickly residents get their prescriptions, and how much they're forced to pay – crippling small, independent pharmacies and restricting access to lifesaving medications in the process."
In an emailed statement, Prime Therapeutics said the partnership makes drugs more affordable.
"A network lease for a portion of our pharmacy relationships is one way in which we help manage costs for our clients and patients, in compliance with all applicable laws," said Prime. "Since the lease agreement was publicly announced in 2019, Prime's data has shown that the agreement provides significant savings to plans and to patients at the point-of-sale – savings that make drugs more affordable, improving medication adherence and health outcomes.
"Pharmacy access is also a critical issue for Prime and its health plan clients to enable patients access to medications necessary for their health. We seek to compensate pharmacies fairly for the supplies, medications, and clinical services they provide, balancing access and affordability to best meet the needs of our health plans and patients."
THE LARGER TREND
The "Big 3" pharmacy benefit managers – CVS Caremark, Express Scripts and OptumRx – mark up specialty drugs at their affiliated pharmacies by hundreds or even thousands of percent, according to a January report from the Federal Trade Commission.
Such significant markups allowed the largest three PBMs and their affiliated specialty pharmacies to generate more than $7.3 billion in revenue from dispensing drugs in excess of the drugs' estimated acquisition costs from 2017-2022, the report found.
These PBMs netted significant revenue at a time when patient, employer and other healthcare plan sponsor payments for drugs steadily increased on an annual basis, the FTC said.
The American Medical Association released data in September showing that the four largest pharmacy benefit managers in the country control roughly 70% of the national market.
The analysis, based on 2022 data on commercial and Medicare Part D prescription drug plan (PDP) enrollees, also found a high prevalence of vertical integration of PBMs with health insurance companies.
CVS Health is the largest PBM (with a 21.3% market share), followed by OptumRx (20.8%), Express Scripts (17.1%) and Prime Therapeutics (10.3%).
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.