Case Description
Michigan brought suit against two pharmacy benefit managers (“PBMs”), Express Scripts, Inc. (“ESI”) and Prime Therapeutics, alleging that the companies entered into an illegal horizontal price-fixing agreement.
PBMs’ clients are third-party payors, such as private insurance companies and large employers, that offer pharmaceutical benefits to their members. As part of the services PBMs offer to third-party payors, PBMs contract with pharmacies to distribute pharmaceutical products to the third-party payors’ members.
Michigan alleges that, rather than compete against each other for pharmacies to distribute pharmaceuticals as part of their networks, entered into an agreement in 2019 that fixed the rates of compensation they would pay to pharmacies. It further alleges that ESI, through its dominant market share in PBM services, has leveraged its market power to steer pharmacy business to its affiliated mail-order pharmacies. The complaint alleges that this conduct has resulted in artificially low pharmacy compensation rates, reductions in the output of pharmacy services, decreases in the quality of those pharmacy services, and a reduction in consumer pharmacy choice.
Michigan alleges that the defendants’ conduct violates federal and state antitrust law. Michigan also alleges defendants action created an illegal public nuisance in violation of Michigan law by resulting in the closure of retail pharmacies across the state, hindering the access to essential medication and healthcare services for Michigan residents.
