Express Scripts sues FTC over report blasting pharmacy middlemen

Express Scripts, one of the country’s largest pharmacy benefit managers, sued the Federal Trade Commission (FTC) Tuesday and demanded the agency retract a report saying the industry middlemen contribute to high drug prices. 

The July report “is filled with false and misleading claims about the pharmacy benefit management (PBM) industry and fails to serve the interests of American consumers,” the company said in a statement. 

According to the legal complaint, the FTC report “is seventy-four pages of unsupported innuendo leveled against Express Scripts and other PBMs under a false and defamatory headline and accompanied by a false and defamatory press release.” 

The lawsuit, filed in federal court in St. Louis, accuses FTC Chair Lina Khan of being biased against the industry and calls for the court to force her recusal from any further actions against Express Scripts.

The interim staff report detailed how increasing vertical integration and concentration has enabled the three largest PBMs — CVS Caremark Rx, Express Scripts, OptumRx — to manage nearly 80 percent of the approximately 6.6 billion prescriptions filled in the United States.  

The report signaled a significant intensification of scrutiny into the business practice of PBMs, the opaque intermediaries in the center of the pharmaceutical distribution system.  

As the industry has grown more consolidated, critics say PBMs have exerted greater control over patients’ access to medicine.

PBMs negotiate the terms and conditions for access to prescription drugs for hundreds of millions of Americans. They are responsible for negotiating prices with drug companies, paying pharmacies and determining which drugs patients can access and how much they cost.  

The FTC said in its report that PBMs can sometimes steer patients away from less expensive medicines and enter into deals intended to block competition in favor of one manufacturer’s product.   

The report found the prescription drug market is “highly concentrated” because the three largest PBMs are owned by insurers, which also own specialty, mail order or retail pharmacies.

But Express Scripts, which is owned by the insurance giant Cigna, said Khan’s alleged bias meant “the fix was in” before the report was issued.  

The lawsuit claims the FTC relied on information “cherry-picked from public sources and anonymous comments to fit the Commission’s predetermined narrative that PBMs drive up drug prices and disadvantage independent pharmacies.” 

“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,” said Andrea Nelson, chief legal officer of Cigna Group. 

In a statement to The Hill, an FTC spokesman said the agency “stands by our study.” 

“Just three companies control nearly 80% of the market that millions of Americans must use to purchase necessary drugs at high costs. This is a complicated and opaque market, and the FTC is committed to using its clear authority to help the public and policymakers understand it,” FTC spokesman Douglas Farrar said.