Pharmacy Benefits

Compounding ‘Conspiracy’ Case Goes to Court

A St. Louis court will hear arguments from pharmacies alleging that Express Scripts and its partners are plotting to drive them out of business.
By: | February 11, 2016

Six pharmacies that manufacture compound medications are suing Express Scripts, saying the pharmacy benefit manager is conspiring to drive the compounding pharmacies out of business. In a suit filed last month in U.S. district court in St. Louis, the pharmacies seek a jury trial on allegations the PBM is engaging in conduct that violates a portion of the Sherman Act.div class=”ad-small”>

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The suit alleges Express Scripts and its “co-conspirators” have been engaged in a boycott of compounding pharmacies to drive them out of business.

“They have conspired with each other to boycott compounding pharmacies by eliminating coverage for compounding ingredients, cutting off network access, and through a specific set of other tactics discussed herein, certainly have caused and will continue to cause on an accelerated basis the significant financial decline (if not elimination) of the plaintiffs and other independent compounding pharmacies from the market for prescription drugs covered by plans,” the suit says.

“As a result of the agreement between Express Scripts and its co-conspirators to exclude plaintiffs and other compounding pharmacies from various prescription drug markets, competition in those markets has been reduced, the supply of medically beneficial compounded products has decreased and faces near elimination, and patients are purposefully being driven to inferior products at Express Scripts’ and its co-conspirators’ own pharmacies.”

Not the First Challenge

The suit is the latest action by the compounding industry against the PBM. In a separate suit that accused the company of violating Employment Retirement Income Security Act regulations by denying claims for compound medications, a U.S. appeals court last month upheld a lower court’s ruling that denied the compounding pharmacies’ request for an injunction.

The latest suit claims the PBM “and its co-conspirators shifted the filling of patients’ prescriptions to pharmacies in which the defendants and their co-conspirators hold an economic interest,” according to the suit. “This manner of horizontal group boycott is a well-established naked restraint of trade barred per se under the federal antitrust laws.”

But company officials dispute the allegations. “We believe the lawsuit is without merit, and we plan to defend ourselves vigorously,” the company said in a statement. “We remain committed to help our clients save money by lowering their spend on unnecessary compounds.”

According to the suit, compounded medicines “play a critical role in meeting the patients’ medical needs” and “serve as an alternative to opioid narcotics.” It says “mass-produced, commercially available drugs prescribed for pain management in pill or injectable form may lead to dependency issues. Compounding pharmacies can, instead, create topical creams that target the specific location of injury while minimizing opioid addiction concerns because the medicine does not enter the bloodstream.”

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But many stakeholders in the workers’ comp industry believe the compounded medications are widely overused and drive up the costs of pharmaceuticals exponentially. Express Scripts is among several PBMs and other stakeholders that have taken steps to curb the unnecessary use of compounding medications for injured workers.

“This is a desperation move by these entities,” said Joseph Paduda, principal of Health Strategy Associates and president of CompPharma, a consortium of PBMs. “After charging huge prices for compounds with marginal if any benefits, many of these compounders have no business taking Express to task for a perfectly legal and appropriate move to end price gouging.”

Nancy Grover is the president of NMG Consulting and the Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected]

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The R&I Editorial Team can be reached at [email protected]