It appears that with every passing day, pharmacy benefit managers find themselves in new legal hot water.
Earlier this week, Ohio State Attorney General filed a lawsuit that alleges that Express Scripts, Prime Therapeutics, Humana Pharmacy Solutions, Humana, Cigna, Cigna’s Evernorth business and Ascent Health Services have engaged in anti-trust practices to drive up the cost of insulin and other life-saving drugs. Express Scripts is the PBM owned by Cigna.
“PBMs are modern gangsters,” said David Yost, Ohio’s attorney general, in a news release. “They were designed to protect and negotiate on behalf of employers and consumers after Big Pharma was criticized for overpricing medications, but instead they have absolutely destroyed transparency, scheming in the shadows to control drug prices on all sides of the market.”
Yost charged that the defendants used a “little-known, Switzerland-based company to illegally drive up drug prices.”
That little-known company is Ascent Health Services, a group purchasing organization which Express Scripts, originally created in 2019 in response to criticism of the PBMs, per a news release from the attorney general’s office. Ascent was ostensibly created to take over from the PBM the task of its pricing and rebate negotiations with drug manufacturers, the news release said. But in reality it was part of a rebate scheme that ultimately hurt Ohioans.
Express Scripts later allowed Prime Therapeutics to become co-owner of Ascent and operations were moved to Switzerland.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
“Through Ascent, it is believed that Express Scripts, Prime Therapeutics, and Ascent customer Humana Pharmacy Solutions are able to share drug pricing and rebate information with one another, as well as to fix rebate prices among them,” the complaint stated. “Ascent, Express Scripts, and Prime negotiate with manufacturers with the intent of increasing the price of pharmaceuticals, including insulins, biologics, and cancer-fighting drugs.”
The complaint alleges multiple violations of the Valentine Act, Ohio’s antitrust law, which prohibits price fixing, controlled sales and other agreements that restrain trade and hurt competition. According to the news release, The Valentine Act is broader than its federal counterpart, the Sherman Act, in that the Ohio law prohibits market harms, in addition to consumer harms.
Meanwhile, PBMs have invited federal scrutiny too.
The Federal Trade Commission is currently engaged in an investigation of six major PBMs — including Cigna’s Express Scripts and Prime Therapeutics — to gain a better sense of how the industry operates. That includes a probe of how the rebate-system works that others have decried as merely “a pay to play” system, a characterization that found its way in the Ohio lawsuit as well.
Express Scripts has used its dominance solely for its own financial gain, creating “a complex ‘pay to play’ rebate system that, perversely, pushes manufacturers to increase drug prices in order to be placed on, or receive, preferred placement on PBM formularies,” news release stated.
These practices have caused undue burden on Ohioans, the state attorney general has alleged. Over 1 million Ohioans have diabetes, many of whom require insulin. The price for insulin in the 1990s hovered at $20 per unit, but has now jumped to cost $300 to $700 for each unit, according to the lawsuit.
However, the final price patients should pay actually falls at the $35 per unit mark, which the suit claims is an amount upon which “there seems to be near universal agreement.” The suit attributes this rise to Express Scripts’ use of Ascent to share pricing models and create an unfair landscape.
A Prime Therapeutics spokesperson said it is not the company’s policy to comment on pending litigation but provided the following statement:
“Prime is a minority owner of Ascent, which is a group purchasing organization that negotiates pharmaceutical relationships and savings opportunities for the purpose of improving affordability for members and plan sponsors across Prime’s client base, including Prime’s Blue Cross and Blue Shield owners.”
Express Scripts, Humana, Cigna, Evernorth and Ascent did not respond to request for comment at the time of publication.
Photo: wildpixel, Getty Images
