Dive Brief:
- Florida’s attorney general is suing Express Scripts and Prime Therapeutics, arguing that a deal between the rival pharmacy benefit managers that allowed Prime to adopt Express Scripts’ lower pharmacy reimbursement rates violates antitrust laws.
The suit, filed last week in Florida’s circuit court, alleges that Prime and Cigna-owned Express Scripts engaged in horizontal price fixing — an illegal agreement between competing companies to manipulate prices — shrinking revenue for the state’s pharmacies and threatening medication access for its patients.
The agreement, which Express Scripts and Prime entered into in 2019, has sparked similar legal challenges in recent years. The companies defend their arrangement as legal and in patients’ best interest.
Dive Insight:
PBMs, influential middlemen in the drug supply chain, contract with payers to provide pharmacy benefits to their members and reimburse pharmacies for dispensing medications. Prime and Express Scripts compete in this arena, but Express Scripts is notably bigger, covering 1 in every 3 Americans, according to the suit filed on Thursday by Florida Attorney General James Uthmeier.
Since Express Scripts is so large, pharmacies have historically accepted lower reimbursement rates in order to be included in its network, figuring that retaining access to the abundance of U.S. patients it represents is worth the trade-off. By contrast, Prime — a smaller PBM — has been forced to offer higher reimbursement rates in order to complete, shelling out on average 20% more than the largest PBMs, according to the complaint.
That all changed in 2019, when Express Scripts agreed to take on retail pharmacy networking and drugmaker contracting services for Prime. As a result, Prime was able to fix its reimbursement rates to match Express Scripts, and the two PBMs shared in the savings.
Because pharmacies rely primarily on revenue from dispensing prescriptions, those lower reimbursement rates turned many profitable prescriptions into losses overnight, according to the lawsuit. Reimbursement rates on some drugs plunged by as much as 80% for certain Florida pharmacies, Uthmeier writes in the complaint.
“Dispensing at a loss puts downward pressure on the pharmacies’ margins and may contribute to the ability of the pharmacy to continue to serve customers — or even continue to exist at all,” the filing states.
Uthmeier argues that the arrangement amounts to price fixing between competitors, in violation of the Florida Antitrust Act and the Florida Deceptive and Unfair Trade Practices Act. The lawsuit asks a judge to force Prime and Express Scripts to undo the agreement, along with civil penalties and other damages.
Prime pushed back on the allegations, arguing that savings generated by PBMs ultimately trickle down to patients.
“The Attorney General's complaint focuses on pharmacy profits but overlooks the impact that higher pharmacy costs have on the patients, employers, health plans and taxpayers who ultimately pay for prescription drugs,” a spokesperson for Prime said.
“Prime's approach has delivered lower costs for patients at the pharmacy counter and substantial savings for individuals, employers and health plans while maintaining broad access to pharmacies,” they added.
Express Scripts did not respond to a request for comment by publication time.
Other states and pharmacies have sued over Prime and Express Scripts’ partnership, alleging that the lower reimbursement rates from the partnership constituted an illegal price-fixing scheme.
In 2023, a group of independent pharmacies filed a class action lawsuit in Wisconsin against the two PBMs. That case was voluntarily dismissed, but a similar lawsuit was filed by nearly 5,000 independent pharmacies against Prime and Express Scripts last month.
