Express Scripts Sues FTC for ‘Defamatory’ Report

Two months after the Federal Trade Commission published an interim report scrutinizing the business practices of pharmacy benefit managers, Express Scripts Inc. has filed a complaint in U.S. District Court against the FTC, claiming the report was “unfair, biased, erroneous and defamatory.”

The FTC was reportedly poised to file a lawsuit against the three largest PBMs—Express Scripts (owned by Cigna Group), OptumRx (UnitedHealth Group) and Caremark (CVS Health)—alleging they pushed patients to more expensive brand-name drugs, including insulin.

In a pre-emptive strike, Express Scripts accused the FTC of publishing an “unsupported innuendo” under a “false and defamatory headline and accompanied by a false and defamatory press release.”

In Express Scripts Inc. v. The Federal Trade Commission et al., filed in U.S. District Cour for the Eastern District of Missouri, Express Scripts also accused the FTC of relying on unverified comments from the pharmaceutical manufacturers and retail pharmacies against which PBMs negotiate to help lower drug costs. Express Scripts claimed the companies on which the FTC relied are incentivized to point the finger at PBMs for allegedly driving up drug costs.

“The Commission’s report followed prejudice and politics, not evidence or sound economics, and wrongly concluded that PBMs inflate drug costs and harm independent pharmacies,” the complaint states. “Express Scripts’ business and reputation have been harmed by the Commission’s unlawful, unconstitutional, and arbitrary and capricious conduct and defamatory statements.”

While the FTC’s report claimed that PBMs inflate drug costs and squeeze Main Street pharmacies, Express Scripts refuted these claims, arguing that PBMs lower prescription drug costs for health plan sponsors who use PBMs to negotiate with pharmaceutical manufacturers and retail pharmacies to “drive cost savings.”

Express Scripts’ complaint further states that without PBMs, plan sponsors “may not be able to afford prescription drug benefits at all.”

Plan sponsors often work with PBMs to administer health care benefits to their participants, and sponsors typically issue requests for proposals detailing their pharmacy benefits needs, to which PBMs respond and compete on quality, cost effectiveness and accountability. Once a plan sponsor selects a PBM, the PBM is able to negotiate contract terms and conditions.

Under the Consolidated Appropriations Act of 2021, employers are required to audit their health care services vendors and their partners, including their PBMs, and make sure their prices are reasonable and that plan participants are paying a fair market price.

Several lawsuits have already come out against health plan providers for breaches of fiduciary duty, including against Johnson & Johnson, the Mayo Clinic and Wells Fargo.

Jamie Greenleaf, co-founder of Fiduciary in a Box, says it is “almost amusing to see Express Scripts try to paint itself as the victim.”

“That aside, as a prudent employer and fiduciary, it’s critical to ensure you’re conducting thorough due diligence on all your covered service providers, including PBMs,” Greenleaf says. “Many employers are locked into unfavorable contracts with their service providers. If I were an employer with one of the big three PBMs (or any PBM), I would review my contract and my [summary] plan documents to assess any potential liability I may face as a plan sponsor under [the Employee Retirement Income Security Act]. Employers have a fiduciary duty of prudence and loyalty, so it’s essential to act once any issues are identified. And ignorance is not bliss.”

Mark Pifko of Baron & Budd, co-lead counsel in the federal insulin pricing litigation, says, “Express Scripts’ lawsuit against the FTC is nothing more than a public relations stunt designed to distract from mounting scrutiny over PBMs’ business practices. The notion that the FTC’s report is biased is belied by more than a dozen bipartisan State Attorneys General cases currently pending against PBMs, multiple government reports, academic literature, and many other lawsuits brought by payers taking issue with the same conduct raised in the FTC’s report. Moreover, from a legal perspective, a defamation suit against the United States is simply not viable.”

The Express Scripts complaint also accuses FTC Chair Lina Kahn of falsely accusing PBMs of controlling drug prices and access to drugs, of taking “kickbacks” from pharmaceutical manufacturers and of seeking to drive independent pharmacies out of business.

Express Scripts is asking the federal judge in St. Louis, Missouri, to order the FTC to take down the report from its website, correct the “false statements” it made about PBMs and recuse Kahn from further proceedings regarding Express Scripts in light of her “evident bias against PBMs.”

Douglas Farrar, a spokesperson for the FTC, , “the FTC stands by our study. 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.”