Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Express Scripts sues FTC over report on pharmacy benefit management industry, (Sep 17, 2024)

By Brian Craig, J.D.

The pharmacy benefit manager (PBM) alleges the FTC report contains false and defamatory statements that PMBs are inflating drug costs.

One of the largest pharmacy benefit managers (PBM), Express Scripts, has filed a complaint in the federal district court of Missouri against the FTC over an interim report surrounding pharmacy benefit managers’ effect on the market for prescription drugs. In the declaratory judgment action and 58-page complaint, Express Scripts argues the interim FTC report contains “unsupported innuendo” with defamatory statements that PMBs are inflating the cost of prescription drugs. Express Scripts asserts a variety of claims—including defamation under Missouri law, due process violations, and violations of the Administrative Procedure Act—while seeking a declaratory judgment and order for removal of the report (Express Scripts, Inc. v. FTC, No. 4:24-cv-01263 (E.D. Mo. Sept. 17, 2024)).

Background. On July 9, 2024, the FTC issued a press release announcing the publication of an interim report concerning the impact that PBMs have on the accessibility and cost of prescription drugs. The report, entitled “Pharmacy Benefit Managers: The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies,” details how the market for pharmacy management services has become both highly concentrated and vertically integrated and how this has led to significant power and influence for PBMs. The FTC found that the largest PBMs can exercise control over price and make critical decisions over access to life-saving medications. The FTC also found that vertically integrated PBMs can self-preference their own affiliated businesses and that they possess the leverage to enter into contractual terms that can disadvantage unaffiliated pharmacies. The FTC found evidence of efforts to limit access to generic alternatives.

General allegations. The complaint alleges that the FTC report contains 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.” Express Scripts asserts that the FTC disregarded millions of documents and data produced by PBMs, relying instead on unverified comments from the very companies that PBMs negotiate against in order to help lower drug costs. The complaint alleges that 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.

Claims. The complaint specifically alleges claims for defamation under Missouri law, due process violations, violations of the Administrative Procedure Act, and violations of Article II of the U.S. Constitution. The complaint asserts the FTC followed prejudice and politics, not evidence or sound economics, and wrongly concluded that PBMs inflate drug costs and harm independent pharmacies. Express Scripts argues its business and reputation have been harmed by the FTC’s unlawful, unconstitutional, and arbitrary and capricious conduct and defamatory statements. The complaint further alleges the report violates Express Script’s due process rights under the Fifth Amendment, alleging the FTC demonstrated actual bias against Express Scripts and other PBMs. Today’s FTC is led by Commissioners and a Chair who came to the agency having already prejudged the PBM industry and with an agenda to advance objectives of favored constituents, the complaint asserts. Express Scripts asserts the FTC report is arbitrary and capricious in violation of the Administrative Procedure Act, 5 U.S.C. § 706(2)(A). In addition, Express Scripts contends the report is not in the public interest in violation of 15 U.S.C. § 46(f) and 5 U.S.C. § 706(2)(C) under the Administrative Procedure Act.

Relief sought. Express Scripts seeks a declaratory judgment that the report defames Express Scripts under Missouri law, violates the Express Scripts’ due process rights under the Fifth Amendment, violates provisions under the Administrative Procedure Act, and violates Article II of the U.S. Constitution. Furthermore, Express Scripts seeks an order vacating and setting aside the report, an order requiring removal of the report from all FTC websites, and an injunction requiring FTC Chair Lina Khan’s recusal from all FTC actions pertaining to Express Scripts. Finally, the complaint seeks attorney fees and costs in bringing the action.

The Case is No. 4:24-cv-01263.

Judge: NA

Attorneys: Christopher A. Smith (Husch Blackwell LLP) for Express Scripts, Inc.

Companies: Express Scripts, Inc.

News: Antitrust ConsumerProtection FederalTradeCommissionNews MissouriNews