An arbitrator has determined Prime Therapeutics violated federal and state antitrust laws against the AIDS Healthcare Foundation (AHF) and independent pharmacies.
In a ruling (PDF) handed down Jan. 17, the AHF was awarded more than $10 million and injunctive relief after Prime Therapeutics was found to engage in horizontal price-fixing with Cigna’s pharmacy benefit manager (PBM), Express Scripts.
Prime is a PBM owned by Blue Cross Blue Shield state plans. It has more than 20 million patients in its network affected by the collaboration.
Prime was told to end its reimbursement structure for drugs under a long-standing collaboration with Express Scripts and to reimburse underpayments since June 30. The cozy relationship between Prime and Express Scripts allowed Prime to reimburse drugs and services the AHF provides to health plans, where Prime is the PBM, at a lower rate.
“Through this case and with this ruling, the Prime-ESI ‘collaboration’ has been clearly exposed as per-se-illegal horizontal price-fixing—the cardinal sin of antitrust law and felonious behavior that government antitrust enforcement agencies … should help put a nationwide end to immediately, for all victims,” said Jonathan Eisenberg, lead counsel for the AHF in the arbitration, in a statement.
The plaintiffs alleged Prime aligned reimbursement with rates set by Express Scripts starting in April 2020. Cigna CEO David Cordani said the partnership, which was announced in December 2019, would drive down costs for consumers. At the time, Drug Channels Institute President Adam Fein speculated the Federal Trade Commission (FTC) would agree with that rationale.
But the American Arbitration Association sided with the AHF, agreeing the collaboration was anticompetitive. The price-fixing allegations were brought in two separate parts—one for terms and rates in commercial PBM transactions in April 2020 and another for Medicare PBM transactions in January 2021.
The two PBMs did not compete on price, harming patients and other pharmacies. Prime’s goal was to lower reimbursement to the AHF, the plaintiffs said.
Prime and Express Scripts worked together through weekly meetings and monthly reports to ensure pricing restrictions were upheld. Prime’s pharmacy price concession incentive program was replaced by Express Script’s direct and indirect reimbursement program in Part D.
“The goal was to reduce by an additional 9% the compensation paid to Prime's network pharmacies,” the ruling said.
Prime saved $2.5 billion in costs from limiting the amount of reimbursements to pharmacies.
"In this arbitration brought by the AHF, Prime demonstrated how actual patients saved on prescription drugs as a result of the agreement," said a Prime spokesperson in a statement shared with Fierce Healthcare. "With this ruling, AHF is seeking to rewind the clock to cause patients living with HIV/AIDS to pay more–not less–at their pharmacy counter and thereby enrich AHF’s bottom line. We strongly disagree with the arbitrator’s ruling in the case and the adverse impact it will have on individuals relying upon AHF for lifesaving medicine."
During the drawn-out legal battle, both sides put forward expert witnesses. The arbitrator was less than convinced by the evidence submitted from Prime from an individual deemed to be an “ideal witness.”
“Prime’s evidence of the benefits to patients was primarily ‘how’ it could pass through the cost savings to patients, ‘ways’ it could do that, and forms it can take, not specific concrete evidence of actual pass-throughs,” the arbitrator said, noting the evidence it did provide only applied to six patients.
“Considering the 20 million-patient universe and the variety of ways Prime said patients could benefit, six examples are an insignificant and inadequate number and basis upon which a conclusion of material benefits could arise,” the arbitrator added.
Beyond the lack of scope, the examples presented from Prime only showed savings for three patients from one medication each, failing to say those patients were randomly selected or that the savings were representative.
“In addition, he referred to the patients' ‘savings’ or reduced ‘payments’ without specifically linking them to the alleged passed-through lowered costs of deductible, co-insurance or copayment,” the arbitrator continued. “He certainly did not hint at any cost savings on premiums.”
While both Prime and Express Scripts publicly praised their working relationship, an expert witness for the AHF said the collaboration allowed Express Scripts to prop up a “weak competitor and potential market casualty” in Prime to keep the PBM industry less competitive. Notably, the Prime expert witness did not refute that claim.
Express Scripts did not respond to a request for comment.
The AHF began litigating this case in federal court in June 2021. Prime successfully moved the case to private arbitration and largely failed to keep the proceedings, documents and materials confidential, Eisenberg told Fierce Healthcare over email. The AHF owns retail and specialty pharmacies throughout the U.S.
Earlier this month, the FTC released another interim staff report showing how the industry’s top PBMs reaped billions from specialty drug markups. The agency sued the PBMs in 2024.
Cigna acquired Express Scripts in 2018 and formed Ascent Health Services, a group purchasing organization, in 2019. Prime Therapeutics is a minority owner in Ascent Health Services.
In March 2023, the state of Ohio sued Express Scripts and Prime for conspiring to increase drug prices using a shared stake in Ascent Health Services.
The AHF sued Express Scripts and its subsidiary Accredo Health Group for monopoly power in Louisiana, mirroring allegations of Prime’s collaboration in this case. The organization also sued Express Scripts in 2022 over clawbacks related to the star ratings program.