Key Points
- Express Scripts is suing the Federal Trade Commission (FTC) over a July 2024 report it claims is misleading and harmful to the pharmacy benefit manager (PBM) industry.
- The FTC found that the 6 largest PBMs control about 95% of US prescriptions and use their dominance to inflate drug prices and limit access to cheaper alternatives like generics and biosimilars.
- Despite criticism, Express Scripts argues that PBMs help reduce drug costs by negotiating lower prices with manufacturers and claims that the FTC's report could lead to higher drug prices for consumers by promoting a false narrative.
Express Scripts, a subsidiary of The Cigna Group, has filed a lawsuit against the Federal Trade Commission (FTC), demanding a retraction of a July 2024 report it claims is false, misleading, and harmful to the pharmacy benefit manager (PBM) industry.1
The interim report2 criticized PBMs for driving up drug costs and harming independent pharmacies, despite their original goal of reducing expenses. The report found that the 6 largest PBMs, control about 95% of prescriptions in the US and used their market dominance to inflate drug prices and discourage cheaper alternatives like generics and biosimilars.
In the suit, Express Scripts argued that the report disregards evidence and could raise drug prices for consumers. According to the PBM, PBMs exist to provide significant value by reducing overall drug costs for employers, labor unions, and other plan sponsors.1 While drug manufacturers set the prices of medications, PBMs negotiate with manufacturers to lower the net cost of drugs for plan sponsors.
“The FTC has taken unconstitutional actions in publishing a report that ignores the evidence provided by our company and other PBMs, demonstrates clear ideological bias and advances a false and damaging narrative – a narrative that could harm the health care system by removing essential checks and balances which would result in higher drug prices for American consumers,” said Andrea Nelson, chief legal officer for The Cigna Group.
However, PBMs have long been seen as the “middlemen” getting in the way of lower drug prices, with negotiations often resulting in cheaper products, such as biosimilars and generics, being placed on formulary tiers with lower rebates in favor of more expensive innovator agents.3 This disincentivizes providers from prescribing products with lower list prices.
In light of this controversy, in 2022, the FTC launched an investigation into the practices of PBMs. The decision reversed a previous stance of inaction and came in response to growing concerns from doctors and patient advocates about the negative impact of PBMs on medical decisions and drug pricing. Critics argued that the consolidation of health plans and specialty pharmacies under one roof incentivized PBMs to steer patients toward their own pharmacies and make formulary decisions based on profit rather than patient needs.
The FTC's investigation required the 6 largest PBMs—CVS Caremark, Express Scripts, OptumRx, Humana, Prime Therapeutics, and MedImpact—to provide detailed records and answer questions about their business practices within 90 days. The probe aimed to shed light on how PBMs' market power affected pharmacies, patients, and overall drug costs.
Following the FTC’s investigation, Congress also took a bigger role in addressing PBM practices, going as far as to hold a hearing pressing PBM chief executives on their role in rising prescription costs.4 The hearing came after the House Oversight Committee’s investigation of PBM practices, which included the assessment of over 140,000 documents and communications from the 3 largest PBMs: CVS Caremark, Express Scripts, and OptumRx. This assessment formed the backbone of a report exposing how PBMs inflate drug prices and interfere with patient care.5
Additionally, Julie Reed, executive director of the Biosimilars Forum, wrote an opinion piece that condemned PBMs for prioritizing high-cost, high-rebate drugs over affordable biosimilars, despite the potential for significant cost savings, calling for urgent reform to address what she views as monopolistic practices of PBMs and improve patient access to affordable medications.6
“Such a failure by PBMs to put patients first — combined with the damning takeaways from the report and hearing this week — demands immediate and robust reform to the underlying cause of this issue: the monopolies of pharmacy benefit managers…. [PBMs] had a golden opportunity to provide access to lower-cost biosimilars to patients struggling to afford this medication, which can cost upward of $84,000 annually. But PBMs chose not to do the right thing simply because providing higher-priced prescriptions is more lucrative for the PBMs than providing lower-cost medicines to patients,” Reed wrote.
There have also been issues with PBM transparency, with senators introducing legislation to reign in some of what PBMs can do, including prohibiting PBMs from “engaging in certain practices when managing the prescription drug benefits under a health insurance plan.”7 The bill (S 127; Pharmacy Benefit Manager Transparency Act of 2023) would also prohibit PBMs from “arbitrarily, unfairly, or deceptively clawing back reimbursement payments, or increasing fees or lowering reimbursements to pharmacies to offset changes to federally funded health plans.”
Despite this, Express Scripts argues that it is trying to change the view of PBMs, insisting that PBMs like itself deliver tangible benefits by reducing net drug costs for employers, labor unions, plan sponsors, and their members.1 In 2023 alone, Express Scripts claimed it saved its clients approximately $38 billion.
“Our clinicians and clinical programs perform thousands of critical medication safety checks on each prescription, and we are constantly innovating to improve medication access and affordability. In a world where pharmaceutical manufacturers continue to raise the price of medications every year, Express Scripts’ work is more important than ever, and we won’t let misinformation or false accusations deter us from our mission,” commented Eric Palmer, president and CEO of Evernorth Health Services.
Nelson concluded in favor of PBMs, “We don’t take this step lightly, but as advocates working to lower drug prices for millions of Americans and the employers, labor unions, and government agencies that provide their prescription drug benefits, we cannot let the FTC’s unlawful actions and false information stand.”
References
1. Express Scripts sues FTC, demands withdrawal of PBM report. Express Scripts. Press release; September 17, 2024. September 17, 2024. https://www.evernorth.com/articles/express-scripts-sues-ftc-demands-withdrawal-pbm-report
2. Caffrey M. FTC finds PBMs drive up drug costs, squeeze out competitors. The American Journal of Managed Care®. July 9, 2024. Accessed September 17, 2024. https://www.ajmc.com/view/ftc-finds-pbms-drive-up-drug-costs-squeeze-out-competitors
3. Caffrey M. FTC inquiry into PBMs to include a look at specialty drug lists. The Center for Biosimilars®. June 9, 2022. Accessed September 17, 2024. https://www.centerforbiosimilars.com/view/ftc-inquiry-into-pbms-to-include-a-look-at-specialty-drug-lists
4. Reed JM. PBMs aren't opening access to lower-cost biosimilars. Reform is needed now. STAT. August 1, 2024. Accessed September 17, 2024. https://www.statnews.com/2024/08/01/pbm-biosimilar-drugs-ftc-action-needed-anti-competitive-practices/
5. Hearing wrap up: Oversight Committee exposes how PBMs undermine patient health and increase drug costs. House Oversight Committee. Press release; July 23, 2024. Accessed September 17, 2024. https://oversight.house.gov/release/hearing-wrap-up-oversight-committee-exposes-how-pbms-undermine-patient-health-and-increase-drug-costs/
6. Comer releases report on PBMs’ harmful pricing tactics and role in rising health care costs. House Oversight Committee. Press release; July 23, 2024. Accessed September 17, 2024. https://oversight.house.gov/release/comer-releases-report-on-pbms-harmful-pricing-tactics-and-role-in-rising-health-care-costs%EF%BF%BC/
7. Pharmacy Benefit Manager Transparency Act of 2023, S 127, 118th Congress (2023-2024). Accessed September 17, 2024. https://www.congress.gov/bill/118th-congress/senate-bill/127
