Attorney General Charity Clark filed a lawsuit July 17 against pharmacy benefit managers Evernorth (owner of Express Scripts) and CVS as well as nearly two dozen affiliated entities for unfairly and deceptively driving up prescription drug prices in Vermont. Pharmacy benefit managers (sometimes referred to as PBMs) are the middlemen who negotiate contracts with pharmaceutical manufacturers, insurance companies, and pharmacies, and dictate the cost of prescription drugs that consumers must pay.
The Attorney General’s lawsuit alleges these companies violated Vermont’s Consumer Protection Act by manipulating the marketplace and reducing access to certain prescription drugs, including lower-cost drugs, through a series of tactics with no transparency in their decision-making process.
“While the pharmacy benefit managers named in our lawsuit claim they perform their services on behalf of their clients and patients to lower prescription drug prices and promote patient health, that is just not true,” said Attorney General Clark. “Instead, they have distorted the market to line their own pockets at the expense of Vermonters. My office is suing to bring transparency to prescription drug pricing and to hold these pharmacy benefit managers accountable.”
“They have distorted the market to line their own pockets at the expense of Vermonters,” said Clark.
Prescription drug prices have increased exponentially in the last decade and these price increases are due, in part, to a complicated business model designed and promoted by pharmacy benefit managers. In Vermont, Evernorth and CVS are the largest pharmacy benefit managers and control approximately 95%t of the commercial market in the state. As a result, they have a hand in nearly every prescription transaction and have near complete control over the pricing, dispensing, and reimbursement systems.
As alleged in the complaint, the named pharmacy benefit managers are incentivized to, and do, grant placement on their standard formularies to the prescription drugs with the largest payments from manufacturers and the highest list prices, while excluding lower-cost prescription drugs. They negotiate which prescription drugs are covered by health insurance plans and require that prescription drug manufacturers provide the pharmacy benefit managers with payments — dressed up as rebates and other fees — that the pharmacy benefit managers then pocket.
The pharmacy benefit managers are not only driving up prescription drug prices through their formulary construction, but they are also preventing patients from accessing lower-priced prescription drugs by excluding them from their formularies.
As an example of this, a New York Times investigation recently revealed that, in Illinois, a woman with cancer paid hundreds of dollars more than she should have for her pain medication because a pharmacy benefit manager required her to use a more expensive version.
Pharmacy benefit managers further drive up prescription drug costs by requiring patients — often with chronic or serious illnesses — to fill their prescriptions from the pharmacy benefit manager’s own in-house pharmacies and then restrict those patients’ access to only the most expensive prescription drugs. This harms consumers as well as local pharmacies.
