Friday, June 2, 2023 | Back issues
Courthouse News Service Courthouse News Service

‘Modern gangsters’: Ohio AG slams prescription drug middlemen

The attorney general’s antitrust suit says pharmacy benefit managers acting as intermediaries between pharmaceutical companies and patients to control the cost of prescription drugs has backfired and increased costs for consumers.

DELAWARE, Ohio (CN) — Three large pharmacy benefit managers control over 75% of the prescription drug market and have colluded to effectively operate as a monopoly while charging exorbitant prices to consumers, according to a lawsuit filed Monday by the state of Ohio.

Express Scripts Inc. is one of those three so-called PBMs, and was called out by Ohio Republican Attorney General Dave Yost for alleged greed and anti-consumer policies.

“PBMs are modern gangsters,” Yost said in a statement. “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.”

According to the lawsuit filed in the Delaware County Court of Common Pleas, PBMs were introduced in response to concerns about overpriced prescription drugs and were intended to negotiate lower prices on behalf of insurance plan sponsors and their insureds.

"Like the importation of kudzu to stop soil erosion, the creation of the PBM was a solution that has become the problem," according to the complaint.

Express Scripts is one of "three big players" in the PBM landscape that control over 75% of the prescription drug market and have used their stranglehold to "extract both monopoly profits from individuals and monopsony profits from the market.

"The individual drug buyer faces a Hobson's choice of either buying medications through the insurer/PBM selected by their employer or paying an inflated 'list' price. From the drug manufacturer's perspective, the insurer/PBM controls access to millions of covered lives.

"Moreover, pharmacies are often left not knowing whether they will book a profit or a loss on a transaction until long after they fill a prescription. The insurer/PBM controls it all," the complaint states.

According to the lawsuit, individuals in rural areas of Ohio are particularly susceptible to the PBMs' tactics, as are independent pharmacies forced to accept reimbursement rates far below the prices they pay for the drugs.

"Defendants know that Ohioans in need of medication, particularly life-saving medication, will pay the asking price," the filing states. "The choice is binary -- pay or suffer. Defendants also know that because of the predominance of prescription insurance, pharmacies and manufacturers will agree to the pricing demands of large PBMs."

To make matters worse, Express Scripts recently relocated its headquarters to Switzerland as a means to avoid scrutiny and cover its tracks, according to Yost.

"The company ... responded to mounting public criticism of PBMs by forming the 'group purchasing organization,' [or GPO,] Ascent Health Services in 2019 – purportedly to take over the company’s pricing and rebate negotiations with drug manufacturers.

"Later that year, though, Express Scripts offered a competitor, Prime Therapeutics, ownership in Ascent and relocated Ascent operations from St. Louis to Switzerland, further concealing its ongoing pricing and rebate scheme," the lawsuit states.

Ascent Health Services LLC is named as a defendant alongside Express Scripts, as well as Cigna Group, Evernorth Health Inc., Prime Therapeutics LLC, Humana Pharmacy Solutions Inc., and Humana Inc.

The lawsuit specifically mentions insulin as an example of Express Scripts' alleged ability to manipulate the market price of a drug. Insulin has skyrocketed to anywhere between $300 and $700, "even though there seems to be near universal agreement that the per unit price to a patient should be around $35."

“Medications shouldn’t cost an arm and a leg, metaphorically or literally,” Yost said. “Insulin is just a symptom of the problem; PBMs are the disease.”

The state of Ohio seeks disgorgement of the companies' ill-gotten gains and statutory fines for violations of the state's Valentine Act, which is used to stop price-fixing and other forms of antitrust behavior.

Express Scripts did not immediately respond to a request for comment.

Read the Top 8

Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.