Prime Therapeutics Found in Violation of Antitrust Laws, Arbitrator Rules

An arbitrator has ruled that Prime Therapeutics, a pharmacy benefit manager (PBM) owned by Blue Cross Blue Shield state plans, violated federal and state antitrust laws. According to Fierce Healthcare, the ruling was issued on January 17, awarding the AIDS Healthcare Foundation (AHF) more than $10 million in damages along with injunctive relief.

The arbitration determined that Prime Therapeutics engaged in illegal horizontal price-fixing in collaboration with Express Scripts, Cigna’s PBM. This arrangement, described by AHF’s lead counsel Jonathan Eisenberg as “the cardinal sin of antitrust law,” allowed Prime to reimburse independent pharmacies and services provided by AHF at reduced rates. Eisenberg called for government antitrust enforcement agencies to address such practices nationwide.

Ruling Unveils Anticompetitive Practices

The arbitration panel found that Prime Therapeutics’ collaboration with Express Scripts included aligning reimbursement rates, which allegedly began in April 2020. Per Fierce Healthcare, the partnership enabled Prime to reimburse pharmacies at rates set by Express Scripts under terms that significantly underpaid independent pharmacies and healthcare providers like AHF. This pricing structure extended to both commercial PBM transactions in 2020 and Medicare PBM transactions in 2021.

Read more: US Law Firm Faces Ethical Allegations Over Blue Cross Antitrust Case

As part of the ruling, Prime Therapeutics was ordered to terminate the reimbursement framework developed with Express Scripts. The PBM must also provide restitution for underpayments dating back to June 2020. According to Fierce Healthcare, Prime serves over 20 million patients, meaning the decision could have widespread implications across its network.

Legal and Market Context

The collaboration between Prime and Express Scripts was first announced in December 2019. At the time, Cigna CEO David Cordani stated that the arrangement would reduce healthcare costs for consumers. However, critics, including AHF, argued the partnership stifled competition and harmed independent pharmacies. Drug Channels Institute President Adam Fein noted that while the Federal Trade Commission (FTC) might have initially viewed the collaboration as cost-saving, the American Arbitration Association ultimately sided with AHF in its assessment of anticompetitive behavior.

Source: Fierce Healthcare