PBM Prime Therapeutics to Pay $10 Million Antitrust Case Over Price-Fixing Scheme with Express Scripts, Inc.

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In a recent antitrust arbitration ruling, Prime Therapeutics, a pharmacy benefit manager (PBM) owned by 19 Blue Cross and Blue Shield Plans, was found guilty of engaging in horizontal price-fixing in collaboration with Express Scripts, Inc. (ESI), a competitor owned by Cigna. The arbitration, led by Arbitrator Stuart M. Widman, concluded that this so-called “collaboration” violated federal and Minnesota antitrust laws and caused significant harm to competition and market fairness. The AIDS Healthcare Foundation (AHF), the claimant in the case, was awarded over $10 million in damages.

Key Findings

Horizontal Price-Fixing: The ruling determined that Prime and ESI implemented a price-fixing scheme under the cover of a “collaboration” that began in December 2019 and was extended through 2025. This arrangement included strict pricing “guardrails,” such as minimums, maximums, and targets, which Prime was required to follow. ESI monitored compliance through regular reports and even issued financial adjustments to ensure adherence.

Anticompetitive Practices: The collaboration effectively eliminated competition between Prime and ESI by aligning reimbursement rates for pharmacies across their networks. This arrangement placed Prime’s pricing decisions under ESI’s control, creating a non-competitive environment that harmed pharmacy providers like AHF.

Market Harm: The ruling highlighted how these practices prioritized corporate self-interest over fostering a competitive marketplace. AHF demonstrated that this scheme caused millions in damages by reducing reimbursement rates for pharmacies, undermining both AHF’s revenues and broader market competition.

Failure to Justify Procompetitive Benefits: Prime argued that the collaboration offered procompetitive benefits, such as reduced costs for consumers. However, Arbitrator Widman found these claims unsubstantiated, emphasizing that any economic benefits accrued primarily to Prime and its owners rather than benefiting consumers or improving market competition.

Legal Implications

The arbitration applied the per se rule, which automatically deems certain antitrust violations illegal without requiring detailed market analysis. Arbitrator Widman rejected arguments to evaluate the case under the more lenient “rule of reason” standard, concluding that the price-fixing agreement had no redeeming procompetitive features. The decision also emphasized that antitrust laws aim to protect competition itself—not individual competitors—underscoring the severity of Prime’s actions as “the cardinal sin of antitrust law.”

Broader Industry Concerns

This case sheds light on troubling practices within vertically integrated healthcare systems. By consolidating power among PBMs, insurers, and pharmacy networks, companies like Prime and ESI can manipulate pricing structures under the cover of cost-saving collaborations.  Look for an Express Scripts ruling to come out soon as well.

Such arrangements often escape regulatory scrutiny but can have devastating consequences for independent providers and market competition.

Outcome

AHF was awarded $10.3 million in trebled damages under federal antitrust law. The arbitrator also granted injunctive relief to prevent further harm from the ongoing collaboration between Prime and ESI. Additional proceedings will determine whether AHF is entitled to recover attorneys’ fees, costs, and interest.

Over the past few years, major PBMs like CVS Caremark, Express Scripts, Optum Rx, and Prime Therapeutics have faced numerous federal or multidistrict cases over allegations of various misconduct.   There are also several similar cases against PBM price fixing filed across jurisdictions around the US.

This ruling opens the door to private entities enforcing state antitrust laws to maintain fair competition and a new tool against PBM monopolization.

Prime Antitrust Ruling 1-22-2025

 

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