Cigna’s PBM Express Scripts Files Lawsuit in Response to July FTC Report
The health care giant’s pharmacy benefit manager subsidiary filed a lawsuit claiming that the FTC’s recent 6(b) report was false and misleading.
On September 17, Cigna’s pharmacy benefit manager (PBM) subsidiary Express Scripts filed a lawsuit against the Federal Trade Commission (FTC) claiming that its interim staff report released on July 9 was misleading and presented false claims against the PBM industry and its interests towards US health care consumers.
What’s the Issue?
In 2022, the FTC launched an inquiry into the 6 largest PBMs—CVS Caremark, Optum Rx, Express Scripts, Humana Pharmacy Solutions, Prime Therapeutics, and MedImpact Healthcare Systems. After 2 years of investigation, the Commission released its interim staff report, also known as a 6(b) report, detailing how these PBMs control a significant portion of the market, discouraging competition and utilizing vertical integration to increase profits.1 Since the release of this report in early July, Express Scripts was the first PBM to take action.2
Cigna's Express Scripts claims that its work with manufacturers and plan sponsors is focused on lowering net costs for consumers. | image credit: photo for everything / stock.adobe.com
Cigna’s lawsuit was filed in St. Louis federal court on Tuesday, further creating friction between the industry’s major PBMs and the FTC. While the FTC is far from the only entity working toward PBM reform and industry regulation, they have led the charge in the past few years by shining a spotlight on these “pharmaceutical middlemen.” And with Express Scripts’ lawsuit directly aimed at the FTC and its Chair Lina M. Khan, both entities have noticeably become each other’s biggest adversary.3
Express Scripts’ key arguments lie in its claims that PBMs are not to blame for rising drug costs and that the drug manufacturers are the true bearers of increasing expenditures. Furthermore, Express Scripts used its lawsuit against the FTC to reinforce its mission of saving consumers money at the pharmacy; something that is not identified in the FTC’s July report.4
READ MORE: How the Big 3 PBMs Utilize Various Market Strategies
Why It Matters
The cost of prescription medications in the US has continuously increased over the past few years. From 2022 to 2023, over 4200 drugs saw price increases—almost half of them growing faster than inflation—with the average price increase for any drug being 15.2%.5 With prices rising at an alarming rate, most entities with a hand in the drug supply chain are calling for reform, pointing their fingers at who they think is responsible for the growing issue.
- According to the news release announcing Express Scripts’ lawsuit against the FTC, the PBMs are placing the blame on drug manufacturers. “Drug manufacturers—not PBMs—set the prices of their drugs. According to a Reuters analysis of 47 medicines, the median annual list price for a new drug was $300,000 in 2023, up from $222,000 in 2022,” wrote Express Scripts.2 Further doubling back on its mission to lower drug prices, Express Scripts claims that its work with manufacturers and plan sponsors is focused on lowering net costs.
- On the other side of the coin, several other health care and government entities—namely the FTC, independent pharmacists, and pharmacy advocacy groups—have been notable opponents of the 6 major PBMs, urging the federal government to enact congressional reform. Indeed, the FTC’s interim report highlighted similar PBM practices from other studies regarding rising drug costs and the inoperability of the pharmaceutical supply chain. Like the FTC’s report, Mattingly et al’s breakdown of the major PBMs showed that the 6 largest PBMs have historically used vertical and horizontal integration, and other patient-driving tactics, to force the use of their affiliated insurers.6
Expert Commentary
- “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.2 “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.”
- “The FTC’s interim report lays out how dominant [PBMs] can hike the cost of drugs—including overcharging patients for cancer drugs,” said FTC Chair Lina M. Khan.1 “The report also details how PBMs can squeeze independent pharmacies that many Americans—especially those in rural communities—depend on for essential care. The FTC will continue to use all our tools and authorities to scrutinize dominant players across health care markets and ensure that Americans can access affordable health care.”
In-Depth Insights
- One of the key supporters of PBMs in the US is the Pharmaceutical Care
Management Association (PCMA), an advocacy group for several PBMs across the country. Releasing a statement in response to both the FTC’s report and Express Scripts’ lawsuit, the PCMA stands by the major PBMs, stating that the report “has fallen far short of providing a definitive, fact-based assessment of [PBMs],” according to the statement.7 - Moving back to the vocal sentiments proclaimed by independent pharmacists and other PBM opposers, many believe that industry reform is solely in the hands of Congress, and until a bill is passed, PBMs will continue to vertically integrate and discourage competition to ultimately turn more profits amidst rising drug costs. Currently, however, there are 3 bills within Congress that have significant potential to be passed in this session: S.3430, the Better Mental Health Care, Lower-Cost Drugs, and Extenders Act of 2023; S.2973, the Modernizing and Ensuring PBM Accountability Act; and H.R.5378, the Lower Costs, More Transparency Act.8
Extra Reading
- Express Scripts sues FTC over drug pricing report (Reuters)
- Express Scripts sues FTC over a ‘biased’ report about pharmacy benefit managers (STAT News)
READ MORE: Discussing the Lack of Transparency in GPOs of 'Big 3' PBMs
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