Dive Brief:
Dive Insight:
The FTC’s lawsuit against Caremark, Express Scripts and Optum Rx — known as the “Big Three” PBMs for their outsized control of the U.S. prescription market — hinges on allegations the drug middlemen prefer more expensive insulin products to generate higher rebates in negotiations with drugmakers.
That preference drives drugmakers to increase the list price of their medications, raising costs for payers and consumers down the line, according to the FTC.
Caremark, Express Scripts and Optum Rx deny their practices contribute to higher prices, and characterize the FTC’s suit as the culmination of top antitrust regulators’ crusade against the PBM industry.
The Big Three also say how the FTC lodged its suit — in an in-house administrative court, instead of a federal one — is unconstitutional, as it allows the agency to act both as a prosecutor and a judge.
Judge Matthew Schelp of the U.S. District Court for the Eastern District of Missouri was unswayed by their point of view.
The PBMs’ arguments don’t have enough merit to throw out the case entirely at this premature stage, Schelp wrote in an order filed on Tuesday.
The PBMs also haven’t shown irreparable harm to warrant a preliminary injunction — and, case precedent shows that the FTC’s adjudicative functions don’t deny due process, Schelp found.
An injunction now would be “against the public’s interest,” Schelp said.
“Here, the Commission found it proper to bring in-house proceedings against Plaintiffs for what the Commission alleges are Plaintiffs’ unfair methods of competition — something Congress directed them to do … Thus, Plaintiffs’ request is one to stop the execution of federal law absent a showing of its unconstitutionality,” the judge ruled.
Schelp’s order is a setback for the PBMs and their parent companies, which rake in billions of dollars in profits annually from the drug middlemen.
The FTC under the Trump administration could take a different tack when it comes to policing the industry, though it’s difficult to forecast whether the recent regime change in Washington bodes well or ill for PBMs.
The Biden administration was aggressive in cracking down on what it viewed as anticompetition in the industry, so the Trump administration — generally more friendly to the private sector — could be a welcome change.
However, the president has made comments critical of the pharmacy intermediaries, including saying he plans to “knock out the middleman” during a news conference in December.
