Cigna's Express Scripts sues FTC over 'defamatory' PBM report
The FTC says it has clear authority to help policymakers understand how PBMs work.
Cigna’s Express Scripts, one of the country’s largest pharmacy benefit managers, today sued the Federal Trade Commission and its chair, Lina Khan, over what the company asserts was a report filled with false and misleading claims about how pharmacy benefit management firms operate.
The report was “74 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 company said in a complaint filed in the U.S. District Court for the Eastern District of Missouri.
“The commission disregarded the millions of documents and terabytes of data produced and relied instead on unverified comments from the very companies that PBMs negotiate against in order to help lower drug costs,” the company said. “Not surprisingly, those entities are incentivized to point the finger at PBMs for allegedly driving drug costs up, when it is PBMs who are, in fact, bringing drug costs down.”
Related: FTC staff objects to big PBMs’ ‘outsized influence’ in interim report
The FTC defended its report: “The FTC stands by our study,” Douglas Farrar, an FTC spokesman, told BenefitsPRO in a statement. “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.”
PBMs
PBMs are organizations that help employer-sponsored health plans, health insurers and other payers negotiate with prescription drug manufacturers and other product and services providers. PBMs contend that they help lower overall prescription costs.
Much of the criticism of PBMs comes from people like Mark Cuban and independent pharmacists who are trying to compete with the big PBMs.
Critics have accused many big PBMs of using hard-to-understand pricing strategies that may, in some cases, create what amount to fake discounts that increase the portion of PBM revenue tied to the size of discounts.
The big PBMs now own their own mail-order pharmacies, and the PBMs’ critics contend that the PBMs steer business to their own pharmacies in ways that may hurt other pharmacies’ ability to compete and, in some cases, drive up patients’ and plan sponsors’ costs.
The FTC report
The FTC released the interim staff report cited in the suit in July, over the objections of one of the commissioners, Melissa Holyoak.
The FTC report was the product of a PBM investigation that the FTC announced in 2022. Investigators ended up looking at both PBMs and prescription drug group purchasing organizations.
Investigators reported that they failed to get some of the information they requested from big PBMs.
They found that the three biggest PBMs manage 79% of U.S. prescriptions, and that a single PBM manages more than 80% of prescriptions in Alabama and South Carolina.
The investigators concluded that increased concentration and vertical integration may have enabled PBMs to lessen competition, hurt rivals and increase drug costs.
Express Scripts’ views
Express Scripts contends in the complaint that the FTC “followed prejudice and politics, not evidence or sound economics,” and that PBMs lower drug costs for employers and other health plan sponsors.
“PBMs enable plan sponsors to offer prescription drug benefits to millions of Americans despite escalating drug prices,” the company said. “Without PBMs, plan sponsors may not be able to afford to provide prescription drug benefits at all.”
Khan has been biased against PBMs since she was in law school, in 2016, the company said.
Shortly before the commission members voted on authorizing the PBM study, Khan “appeared at an event cohosted by a pharmacists’ lobby group, funded in part by large drug wholesalers and pharmacies, and trashed PBMs to cheers and applause. In numerous speeches and writings since then, Chair Khan has continued her tirade against PBMs without factual support.”
The allegation that Express Scripts failed to all requested data is misleading, because the company spent millions of dollars and tens of thousands of dollars to provide 3.3 million pages of documents and more than 769 million rows of data for the FTC investigators, the company said.
The company has accused the FTC of defamation; violation of the Fifth Amendment of the U.S. Constitution’s due process clause; violations of the federal Administrative Procedure Act; and violation of Article II of the Constitution, which governs presidential executive authority.
Express Scripts says the authority of the FTC’s commissioners is unconstitutional because the commissioners exercise executive authority but the president cannot freely remove them.
Express Scripts has asked the court to force the FTC to retract the report and for Khan to be recused from commission proceedings regarding Express Scripts.