The following article was originally published in the Ohio Capital Journal and published on News5Cleveland.com under a content-sharing agreement.
A lawsuit accusing huge health care companies of colluding to jack up prices is stalled as the sides fight over which court should hear it.
Ohio Attorney General Dave Yost last March sued Express Scripts, Humana and other companies, accusing them of violating state antitrust law and the Ohio Deceptive Practices Act. But even though the state attorney general is suing the companies under Ohio law, they’re continuing their efforts to have the case heard in federal court, where they want it dismissed.
As a pharmacy benefit manager, Express Scripts represents insurers in drug transactions. It and the other large PBMs are exempted from the federal anti-kickback statute as they negotiate large, often-secret discounts from drugmakers in exchange for putting the companies’ products on lists of covered drugs.
Pharmacy benefit managers also create networks of pharmacies and determine how much to reimburse them for the drugs they dispense.
In his lawsuit, Yost named Express Scripts and corporate relatives Cigna and Evernorth as defendants.
He also named Ascent Health Services, a “group purchasing organization” that Express Scripts formed in 2019 as calls grew for more transparency around PBMs’ dealings with drugmakers. Even though all of its customers are in the United States, Express Scripts headquartered important parts of the company in Switzerland, home to some of the strictest bank-secrecy protections in the world.
Prime Therapeutics bought a minority stake in the company in December 2019, and Yost named that company as a defendant in the Ohio suit as well. Humana Pharmacy Solutions, a smaller PBM that does business with Ascent, is also defendant.
Among the claims against the companies is that by working through Ascent, the companies effectively pool pricing information, allowing them to avoid competing with each other and to take advantage of pharmacies, with which Express Scripts directly competes in the specialty drug space. The effect, Yost argues, is to make prescription drugs artificially expensive.
“Ascent was, they realized, the perfect vehicle to harmonize and fix drug prices, rebates and fees and retail pharmacy reimbursements,” the suit said. “Eventually, certain Ascent customers — such as defendant Humana Pharmacy Solutions — also participated in and benefited from this combination.”
The suit also accuses Express Scripts of unlawfully punishing Kroger, which has its own pharmacies, for pulling out of its deal with Express Scripts because it believed the PBM’s reimbursements were unfairly low. Yost accused it of “working with Ascent to remove Kroger, as a PBM exclusively for its own employees, from being an Ascent customer in retaliation for Kroger withdrawing from Express Scripts networks.”
Express Scripts and the other defendants deny the accusations. They argue instead that their increased negotiating strength gives them the power to force down the prices charged by drugmakers and pharmacies.
But rather than using that argument to fight the case in state court in Delaware County, Express Scripts had it moved to federal court shortly after it was filed. Then last September, it moved to have the case dismissed.
“In a colorful Complaint, (Yost) purports to identify antitrust conspiracies around every corner and lay the blame for high prescription drug prices at the feet of companies that work to negotiate to lower drug prices for their clients, sponsors of prescription drug plans,” the company’s lawyers said in the filing.
They added a statement that seems questionable on its face.
“It is hornbook (blackletter) law that a company cannot conspire with itself in violation of the antitrust laws, including the Valentine Act. Therefore, Count I should be dismissed on that basis alone,” the brief said.
That ignores the fact that Ohio is not only suing companies under the same corporate umbrella as Express Scripts, but also Humana and Prime Therapeutics.
It also seems to ignore history. As with the country’s other two dominant PBMs — CVS Caremark and OptumRx — Express Scripts is part of a corporation that also owns a top-10 insurer, Cigna, and it owns Accredo, a mail-order pharmacy that sells what is generally the most expensive class of drugs.
Critics of the company say that being such big players in multiple parts of the health care sector gives the companies power to advantage their business units through illegal, anticompetitive practices. The Federal Trade Commission opened an investigation into those claims in 2022. It subsequently expanded the probe and it’s ongoing.
Yale University history professor Paul Sabin similarly described Standard Oil’s “vertical integration.” The U.S. Supreme Court in 1911 dismantled the company under the Sherman Antitrust Act. The law, case and company all had strong ties to Ohio.
“As the company grew into a multi-faceted enterprise operating across state lines and internationally, Standard Oil tied ostensibly independent business units together into a single far-flung, interlocking operation,” Sabin wrote.
As for Express Scripts, Cigna, Evernorth and the other companies associated with Ascent, they were unsuccessful in their initial attempt to move the Ohio antitrust case to federal court and kill it there. On Jan. 5, U.S. District Court Judge Michael H. Watson granted Yost’s motion to move the case back to state court and declared the defendants’ motions to dismiss it to be moot.
Hearings in Delaware won’t start any time soon, however. Express Scripts and the other defendants appealed Watson’s order to the 6th U.S. Circuit Court of Appeals in Cincinnati the same day he issued it. No hearings have been scheduled.
