Michigan Sues Express Scripts, Prime Therapeutics for Alleged Price-Fixing Scheme

Michigan has launched legal action against two of the nation’s leading pharmacy benefit managers (PBMs), accusing them of striking a price-fixing deal that undermined independent pharmacies and restricted access to essential medications across the state.

According to Bloomberg, Michigan Attorney General Dana Nessel filed a lawsuit Monday in federal court against Express Scripts Inc. and Prime Therapeutics LLC, claiming the companies entered into a 2019 agreement that illegally fixed pharmacy reimbursement rates and stifled competition. The complaint, filed in the U.S. District Court for the Eastern District of Michigan, seeks to dismantle the agreement and address the broader impacts on healthcare accessibility.

Per Bloomberg, the lawsuit alleges that Express Scripts and Prime Therapeutics coordinated to suppress the payments made to pharmacies for dispensing medications. In doing so, the companies allegedly prioritized their own profits while jeopardizing the viability of small, community-based pharmacies. Independent pharmacies in Michigan, many already struggling to survive in a competitive market, were reportedly reimbursed at rates so low that some were forced to operate at a loss.

The complaint centers on a December 2019 deal in which Prime Therapeutics adopted Express Scripts’ lower reimbursement structure in exchange for access to its expansive pharmacy network and purchasing leverage. As a result, pharmacies outside of this preferred network were allegedly paid so little that it sometimes cost more to dispense medications than the reimbursements received.

Read more: Belgian Watchdog Fines Pharma Giants Over Anti-Competitive Practices in Pharmacies

Nessel’s office contends that the partnership has significantly contributed to the decline of independent pharmacies across Michigan, particularly in underserved areas. The lawsuit argues the agreement helped create so-called “pharmacy deserts,” particularly in half of Detroit’s neighborhoods and in parts of northern Michigan, where residents now face long drives to obtain critical medications.

“Michigan residents should not have to drive 45 minutes, or sometimes even farther, to pick up the insulin, heart medication, or antibiotics they need,” Nessel said 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.”

The state is seeking to void the agreement between the PBMs and implement remedies to restore competitive conditions in the pharmaceutical supply chain. Nessel emphasized that the legal action is a step toward restoring fairness and ensuring access to affordable medications for all Michiganders.

“With this lawsuit, we are putting an end to these harmful practices to ensure Michiganders have reliable, affordable access to the medications they depend on,” she added.

PBMs like Express Scripts and Prime Therapeutics serve as intermediaries in the pharmaceutical supply chain, negotiating prices and managing benefits on behalf of insurers. However, critics argue that their influence has grown unchecked, allowing them to dictate terms that favor large networks and hurt smaller operators.

Source: Bloomberg