Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Prescription benefit manager allegedly conspired to monopolize specialty pharmacy services market, (Apr 20, 2016)

By Linda O’Brien, J.D., LL.M.

One of the nation’s largest pharmacy benefit managers has used its dominant market power to eliminate competition from independent pharmacies in the specialty prescription drug market, in order to shift patients to its own mail order pharmacy, according to a complaint filed in the federal district court in Newark, New Jersey (Prime Aid Pharmacy Corp. v. Humana Inc., April 15, 2016).

Prime Aid Pharmacy is a prominent independent specialty pharmacy in New Jersey that services thousands of patients with acute chronic conditions and annually fills tens of thousands of medications for New Jersey residents.

The complaint states that prescription benefit managers (PBMs) administer the prescription drug portion of an insurance company, health plan, or self-insured employer’s healthcare benefit program. PBMs process and make payments on claims submitted to them for prescription medications that are dispensed by a pharmacy to a patient. Humana Inc. is one of the largest PBMs in the United States. Humana also operates its own pharmacy, including mail order and specialty pharmacy medications.

In April 2014, Humana notified Prime Aid that it was terminating Prime Aid from its provider network for violating Humana’s terms and conditions by sending medications to patients in states in which Prime Aid was not licensed and by delivering medications to patients through mail delivery services. Although Prime Aid refuted those allegations, Humana denied Prime Aid’s request for a hearing, the complaint states.

According to the complaint, Humana’s termination of Prime Aid from its network was without cause and was instead an unlawful attempt to eliminate Prime Aid as competition in the specialty pharmacy services market. More than one year after being terminated by Humana, Prime Aid has submitted an application and supporting documentation to Humana necessary for re-admittance to the Humana network. However, Humana has responded that Prime Aid will not be eligible to reapply for a Humana contract until five years have passed from the date the pharmacy was terminated. Prime Aid claims that the industry standard for excluding a pharmacy from a PBM network after the pharmacy was terminated for cause is one year. Humana has no legal basis for a protracted exclusionary period, such exclusionary period is arbitrary, and Humana’s policy violates the “spirit and letter” of New Jersey’s Any Willing Provider law.

The complaint also alleges that Humana has engaged in a sham exercise, refusing to allow Prime Aid access to its network on pretextual grounds. Access to that network is essential to Prime Aid’s ability to compete with Humana for specialty pharmacies. Patients who are insured in plans in Humana’s PBM network are locked into using specialty pharmacies approved by Humana. Humana’s denial of access to a locked-in patient specialty pharmacy, market by independent pharmacies such as Prime Aid, harms competition and consumer welfare, Prime Aid contended.

The plaintiff asserts claims for conspiracy to restrain trade in violation of Sections 1 and 2 of the Sherman Act and New Jersey Antitrust Act. The action seeks declaratory and injunctive relief, treble damages, costs of suit, attorney fees, and any other just and proper relief.

In a related action, also filed in the federal district court in Newark, Prime Aid alleged that pharmacy benefit manager Envision Pharmaceutical Services denied Prime Aid access to its provider network in an attempt to monopolize the market for specialty pharmacy services and drive patients to its own mail order pharmacies (Prime Aid Pharmacy Corp. v. Envision Pharmaceutical Services LLC, April 15, 2016).

The case is No. 2:16-cv-02104-SDW-LDW.

Attorneys: Jonathan L. Swichar (Duane Morris LLP) for Prime Aid Pharmacy Corp.

Companies: Prime Aid Pharmacy Corp.; Humana Inc.; Envision Pharmaceutical Services LLC

News: Antitrust NewJerseyNews