Ohio Attorney General Sues Express Scripts and Others for Driving Up Drug Costs

Ohio Attorney General David Yost filed a lawsuit against Ascent Health Services, Express Scripts Inc., Cigna Group, Evernorth Health Inc., Prime Therapeutics LLC, Humana Pharmacy Solutions Inc., and Humana Inc., alleging that they drive up the price of prescription drugs by working with an overseas subsidiary to share pricing information and gain higher rebates from manufacturers.

Yost alleged that the collusion among companies was possible because of market consolidation, leaving the three largest pharmacy benefit managers, or PBMs, (including Express Scripts) in control of more than 75% of the drug market while the next three largest PBMs control most of the other 25%.Yost specifically called out Express Scripts multiple times throughout the complaint, saying that they have “created a black box that holds a complex administration system that allows the PBMs, including Express Scripts, to enrich themselves in multiple ways,” all at the expense of consumers and other industry participants.

Yost referred to the PBMs as “modern gangsters” in his lawsuit, noting that while they were designed to protect and negotiate on behalf of employers and consumers they have instead “destroyed transparency, scheming in the shadows to control drug prices on all sides of the market.” He goes on to note that because of the dominance of the PBMs, draw the buyers and sellers have to play by their rules.

Yost cited the formation of Ascent, a group purchasing organization (GPO), by Express Scripts in 2019 as “part of an ever-evolving effort to add complexity and opacity to the market.” Shortly thereafter, Express Scripts invited its competitor Prime Therapeutics into Ascent. Ascent is allegedly used to share pricing amongst its members, and therefore it is believed that companies such as Express Scripts, Prime Therapeutics, and Ascent customer Humana Pharmacy Solutions, are all able to share drug pricing and rebate information with one another and fix rebate prices among themselves.

The lawsuit goes on to allege that PBM’s use their market power to harm competing pharmacies, especially smaller independent pharmacies. To stay in insurance networks, pharmacies are often forced to accept drug reimbursement rates below what the pharmacies pay for the drugs. Minimal cost savings are actually passed on to the Plan Sponsors or the covered individuals/patients. Instead, the customers pay the contract rates, which often exceeds what the pharmacy is actually paid for the drug and the PBM pockets the profit between the two prices. The complaint also notes that pharmacies are unaware of how much they will be reimbursed for a drug by a PBM until after the medication is picked up by the patient.

Yost cites the ongoing difficulties that Kroger is having with Express Scripts, saying, “When a shadowy business controls pricing and reimbursement rates to such an extent that even the nation’s largest grocer can’t turn a profit working with Express Scripts, imagine the impact on a mom-and-pop pharmacy in rural Ohio — and the local residents.”

The complaint alleges violations of Ohio’s antitrust law, which prohibits price fixing, controlled sales, and other agreements that serve to restrain trade and hurt competition. Yost says that the arrangement between the defendant companies has hurt drug manufacturers and pharmacies as well as patients. Additionally, while the complaint specifically targets insulin, it also notes similar situations taking place with other drugs and biosimilars. In a press release announcing the lawsuit, Yost said “insulin is just a symptom of the problem; PBMs are the disease.”

Yost is seeking statutory fines and disgorgement of profits.

This follows the January 2023 lawsuit filed by California Attorney General Rob Bonta that alleged several drug manufacturers and PBMs leveraged their market power to overcharge patients for insulin.