Dive Brief:
- Ohio Attorney General David Yost has filed suit against Cigna Group, Humana and Prime Therapeutics for allegedly driving up the price of drugs by working with an overseas subsidiary to share pricing information and gain higher rebates from manufacturers.
- The suit, filed Monday in a state court, alleges that Cigna-owned Express Scripts, Prime and Humana’s PBM engaged in price fixing that ultimately harmed vulnerable Ohio pharmacies and patients.
- It comes amid rising scrutiny of PBMs from state and federal lawmakers, and before a Senate finance committee hearing on the middlemen’s impact on patients and taxpayers scheduled for Thursday.
Dive Insight:
Pharmacy benefit managers are facing increased scrutiny this year, both from federal lawmakers and in court, where states like California have filed suit against major PBMs and drug manufacturers over concerns related to inflated insulin prices.
The Ohio lawsuit alleges that PBMs — companies that operate as middlemen between drugmakers and pharmacies on behalf of health plans — use their outsized market power to push drugmakers to inflate list prices and garner higher rebates while stiffing pharmacies and consumers.
Three of the largest PBMs — CVS-owned Caremark, Express Scripts and United Health-owned OptumRx — control 75% of the market, giving drug buyers and sellers “little choice but to play the game by the PBMs’ rules,” according to the lawsuit.
The suit narrows in on Express Scripts, alleging that the company formed a group purchasing organization, Ascent Health Services, in 2019 for greater control over pricing and rebate negotiations with drugmakers.
Later that year Prime Therapeutics, a competing PBM, was then offered ownership in the new group purchasing organization, and Ascent relocated from St. Louis to Switzerland, allowing it to further obscure its pricing model.
Express Scripts and Prime Therapeutics used the subsidiary to share pricing, discount and rebate information with each other and with Humana’s PBM to drive up drug prices and force pharmacies to accept low reimbursement rates, the suit alleges.
In a statement on the suit, Yost called PBMs “modern gangsters” that have “absolutely destroyed transparency, scheming in the shadows to control drug prices on all sides of the market.”
The suit also points to major grocer Kroger, which terminated its contract with Express Scripts last year over high drug costs.
“When a shadowy business controls pricing and reimbursement rates to such an extent that even the nation’s largest grocer can’t turn a profit working with Express Scripts, imagine the impact on a mom-and-pop pharmacy in rural Ohio — and the local residents,” Yost said in the release.
Ultimately the suit claims that the companies have violated Ohio’s antitrust law that prohibits price fixing, controlled sales and other agreements retaining trade and harming competition. The state’s antitrust law is broader than federal antitrust law, and bars both market harm and consumer harms, according to the release.
Prime Therapeutics declined to comment on pending litigation. Humana and Cigna did not provide comment at the time of publication.
