The state of Michigan has sued pharmacy benefit managers Express Scripts and Prime Therapeutics for anticompetitive behavior and suppression of reimbursement rates to independent pharmacies.
Michigan Attorney General Dana Nessel argues an agreement between the two PBMs helped foster pharmacy deserts across the state and violated antitrust laws. Half of Detroit's neighborhoods are classified as pharmacy deserts (PDF), the lawsuit claims.
Express Scripts has controlled 89% of the PBM market since 2021. Plaintiffs say this is “likely the largest market share ever achieved by a single PBM within a single U.S. state.” In some cities, the market share stretches up to 96%.
It’s not the first time Express Scripts, a Cigna company and one of the three largest PBMs, and Prime Therapeutics, owned by the Blue Cross Blue Shield Association, have been sued.
In March 2023, Ohio sued the two PBMs and group purchasing organization Ascent Health Services, which is jointly owned by Express Scripts and Prime. Independent pharmacies in Wisconsin, Minnesota and New Jersey followed suit in October 2023, alleging a collaboration between Express Scripts and Prime in late 2019 amounted to collusion. And, in January, an arbitrator determined Prime engaged in horizontal price-fixing with Express Scripts, winning the AIDS Healthcare Foundation $10 million.
The latest lawsuit points to the same agreement from 2019, where Prime reportedly adopted Express Scripts’ lower reimbursement rates. In return, Prime could pay to have access over Express Scripts’ buying power and pharmacy network, a news release says. Effectively, Express Scripts held monopoly and monopsony control over the market, the plaintiff believes. Over time, Prime saved at least $2.5 billion because of the collaboration.
This agreement sometimes caused independent pharmacies to pay more to dispense medications than the money they’d receive back from insurers.
“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.”
A Prime spokesperson returned a request for comment.
"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," the spokesperson said. "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."
Since 2019, Express Scripts has added 30 million more lives under its pharmacy benefits umbrella, totaling about 105 million people. The company controls 23% of the PBM market nationwide.
“The increased scale Express Scripts achieved through its unlawful arrangement with Prime has allowed Express Scripts to extract greater contractual concessions from pharmacies than would be possible in a competitive market, further suppressing net compensation amounts paid to pharmacies, including in Michigan,” the lawsuit adds.
From January to August 2024, 272 pharmacies closed in Michigan. While PBMs are generally associated with the demise of independent pharmacies, the lawsuit notes their business practices are attributable to store closures for Rite Aid and Walgreens, too. More Rite Aids closed in Michigan than in any other state.
Pharmacy deserts are closely tied to lower rates of vaccination, less access to contraception and naloxone, and higher rates of unintended pregnancies and teen births, plaintiffs add.
The lawsuit also points to a Federal Trade Commission report that found pharmacies affiliated with Express Scripts mark up specialty drugs by thousands of percentage points beyond acquisition costs. Although affiliated pharmacies bring in higher revenues, that’s at the expense of Michigan health plans because costs and premiums also rise.
Express Scripts did not immediately respond to a request for comment.