Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Prescription benefit manager allegedly conspired to boycott independent compounding pharmacies, (Feb 17, 2016)

By Linda O’Brien, J.D., LL.M.

The nation’s largest pharmacy benefit manager has conspired to reduce competition from independent compounding pharmacies and eliminate those pharmacies from the prescription drug market in order to shift patients to its own specialty and mail order pharmacies, according to a complaint filed in the federal district court in St. Louis (ZMS 1 LLC v. Express Scripts Holding Company, February 16, 2016).

ZMS 1 LLC, doing business as The Medicine Shoppe, is an independently owned compounding pharmacy that provides custom made, compound medications to patients.

The complaint states that prescription benefit managers (PBMs) administer the prescription drug portion of healthcare benefit programs. As part of their function, PBMs review claims, negotiate branded drug rebates, review drug utilization, process claims from pharmacies for payment, and operate specialty and home-delivery pharmacies. PBMs dominate the market for administering prescription drug payments to pharmacies and manage approximately 95 percent of all prescription drugs covered by insurance. In 2013, one of the largest PBMs, Express Scripts, joined together with CVS Health Corporation, OptumRx, Inc., and Prime Therapeutics, LLC, through the industry group Pharmaceutical Care Management Association (PCMA), allegedly to eliminate coverage for compounded medications.

According to the complaint, Express Scripts and its co-conspirators coordinated efforts to boycott independent compounding pharmacies by utilizing various anticompetitive means. Those actions included: (1) identifying and targeting physicians that prescribed compounded drugs and coerced those physicians to cease prescribing them; (2) making false and misleading statements to physicians and patients about the safety and legality of compounded drugs; (3) eliminating coverage or denying claims for compounded drugs; (4) drastically reducing reimbursements to pharmacies for compounded drugs; (4) orchestrating substantial administrative obstacles for compounding pharmacies to fill prescriptions and obtain reimbursement; (5) restricting and/or eliminating the use of mail order delivery of compounded drugs; and (6) removing pharmacies from networks by terminating provider agreements. Express Scripts also audited the plaintiff on claims that had been previously approved and withheld reimbursement on improper bases.

As a result of the alleged anticompetitive conduct of Express Scripts and its co-conspirators, the plaintiff’s revenues and profits have decreased since Express Scripts has placed unauthorized limitations on the mail order delivery of compounded medications, refused to cover prescriptions that contain non-FDA approved ingredients, terminated provider agreements, and decreased reimbursement amounts. Express Scripts’ actions also have substantially harmed competition and adversely affected the health of patients by depriving them of medications needed to treat their individual and specialized needs, the complaint alleges.

The plaintiff asserts claims for conspiracy to restrain trade in violation of Section 1 of the Sherman Act. The action seeks declaratory and injunctive relief, compensatory and treble damages, interest, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 4:16-cv-00211.

Attorneys: Anthony G. Simon, John G. Simon, and Benjamin Askew (The Simon Law Firm, P.C.) for ZMS 1 LLC.

Companies: ZMS 1 LLC; Express Scripts Holding Company; Express Scripts, Inc.

News: Antitrust MissouriNews