Express Scripts (NSDQ:ESRX) and CVS Health (NYSE:CVS) were among the pharmacy benefit managers named in a lawsuit last week, when a potential class of patients accused them of violating the Employee Retirement Income Security Act by failing to negotiate lower prices for Mylan’s EpiPen allergy auto-injector.
The suit, filed in the Minnesota District Court, alleges that instead of fighting for lower prices for ERISA plans, “defendants negotiated for increasingly large rebates from Mylan for themselves and their clients, driving up the price of EpiPen.”
“Rather than passing these rebates on to class members in the form of lower or stable prices, defendants kept significant amounts, resulting in massive revenue increases for themselves and massive price increases for members of the class,” the complaint said.
The attorney managing the case said it is the 1st suit that deals with the pricey auto-injector to focus on PBMs.
PBMs act as middlemen bewteen drugmakers and pharmacies, deciding which drugs health plans provide to their members. In exchange for coverage, drug companies give PBMs discounts – also called rebates.
PBMs also work to determine how much pharmacies will be reimbursed for each drug and therefore help determine how much consumers pay. The lawsuit alleges that the system is “opaque” and a lack of transparency ultimately hurts patients.
The group of patients filing the lawsuit claim that their deductibles have grown by nearly 1,600% and that copayments are up more than 1,500%. They’re seeking class certification, a ruling that the PBMs violated their fiduciary duties and related awards.
But PBMs have repeatedly maintained that drug manufacturers are responsible for setting the price of drugs.
“This lawsuit is built on a false premise about the role of PBMs, and the allegations against us are completely without merit,” CVS spokesman Michael DeAngelis told Law360. “Pharmaceutical companies alone are responsible for the prices they set in the marketplace for the products they manufacture. Nothing in our agreements prevents a drug manufacturer from lowering the prices of their products and we would welcome such an action.”
“As a company, it is our policy not to comment on the specifics of pending litigation. We do, however, believe this lawsuit has no merit and we will vigorously defend against it,” Prime Therapeutics, another PBM named in the suit, told the news wire.
“Rebates don’t raise drug prices, drugmakers raise drug prices. We will vigorously defend ourselves,” an Express Scripts spokesman added.
