A 2019 deal between two companies that play a middleman role in the health insurance system was actually an illegal price-fixing scheme that’s helped drive some independent pharmacies out of business, according to a lawsuit Michigan Attorney General Dana Nessel filed this week.
The companies, Express Scripts and Prime Therapeutics, are pharmacy benefits managers (PBMs). Those companies help set drug prices, lower costs for insurance companies, and reimburse pharmacies for filling prescriptions. They’ve come under intense scrutiny in recent years, particularly during the Biden administration, and were the subject of a 2024 Federal Trade Commission (FTC) report which found they played a role in driving up prescription drug costs and straining independent pharmacies across the country.
The lawsuit alleges that in December 2019, Express Scripts and Prime Therapeutics entered into an agreement for Prime Therapeutics to adopt Express Scripts’ lower reimbursement rates in exchange for accessing Express Scripts’ buying power and pharmacy network, all while paying Express Scripts administrative fees.
The legal complaint alleges that this amounts to illegal price-fixing and anti-trust violations. “Sometimes, the reimbursements are so low that pharmacies allegedly pay more to dispense medications to patients than they get back from insurers,” a press release from Nessel’s office says.
“The Attorney General alleges that these arrangements contributed to the creation of pharmacy deserts in half of Detroit’s neighborhoods and numerous communities throughout northern Michigan.”
The lawsuit “seeks to terminate the agreement between Express Scripts and Prime Therapeutics, among other remedies,” the Attorney General’s office says.
Wayne State University law professor and anti-trust law expert Stephen Calkins said PBMs have been the subject of federal scrutiny—and increasingly, public backlash—for some time now. “And yet the Biden Administration did not file a lawsuit against this combination,” he noted.
Calkins said the deal was publicly announced back when it was first made in 2019, and “if it were nakedly illegal, they would have gotten sued.” He added that proving the deal is the cause of more independent pharmacies closing their doors could be a heavy lift.
“It's a tricky thing,” Calkins said. “You can't automatically say that just because firms are going out of business, something is anti-competitive.”
"The agreement provides significant savings to plans and to patients at the point-of-sale – savings that make drugs more affordable, improving medication adherence and health outcomes.”
Both Express Scripts and Prime Therapeutics say the deal has always been both entirely public, and legally aboveboard. "We are committed to reimbursing network pharmacies fairly and will vigorously defend ourselves against the baseless allegations in this complaint,” an Express Scripts spokesperson said via email.
And a Prime Therapeutics spokesperson sent a statement via email, which reads in part:
