FTC Sued Over July Report Criticizing Pharmacy Middlemen

The headquarters of Express Scripts, one of the largest U.S. pharmacy benefits management companies, in Berkeley, Mo., in 2011. AP Photo/Jeff Roberson

Express Scripts, a major player in the pharmacy benefit management industry, filed a lawsuit on Sept. 17 against the Federal Trade Commission (FTC) over its July 2024 interim report on pharmacy benefit managers (PBM), which accuses dominant PBMs of contributing to rising drug prices and harming smaller, independent pharmacies.

The company is seeking declaratory and injunctive relief, claiming that the report is biased and defamatory. The FTC describes PBMs as “middlemen, negotiating the terms and conditions for access to prescription drugs for hundreds of millions of Americans.”

Express Scripts described the report as “seventy-four pages of unsupported innuendo leveled against Express Scripts and other PBMs under a false and defamatory headline and accompanied by a false and defamatory press release.”

The FTC’s report, released on July 9 as part of a broader investigation that began in 2022, highlighted the fact that the three major PBMs—CVS Caremark, Express Scripts, and OptumRx—control nearly 80 percent of prescriptions filled nationwide.

The agency alleged that this concentration allows PBMs to inflate consumer costs and squeeze independent pharmacies, particularly in rural areas.

Express Scripts’ lawsuit, filed in the U.S. District Court for the Eastern District of Missouri, argues that the FTC’s report “disregarded the millions of documents and terabytes of data produced and relied instead on unverified comments from the very companies that PBMs negotiate against in order to help lower drug costs.”

It further alleges in the suit that “those entities are incentivized to point the finger at PBMs for allegedly driving drug costs up.”

Express Scripts argues that it is bringing costs down.

Douglas Farrar, an FTC spokesperson, told The Epoch Times in an emailed statement: “The FTC stands by our study. Just three companies control nearly 80 percent of the market that millions of Americans must use to purchase necessary drugs at high costs. This is a complicated and opaque market, and the FTC is committed to using its clear authority to help the public and policymakers understand it.”

Express Scripts and other PBMs stated after the report that they negotiate lower drug prices for health plan sponsors and help make medications more affordable.

“The Commission’s Report followed prejudice and politics, not evidence or sound economics, and wrongly concluded that PBMs inflate drug costs and harm independent pharmacies,” the company stated in the lawsuit. “Express Scripts’ business and reputation have been harmed by the Commission’s unlawful, unconstitutional, and arbitrary and capricious conduct and defamatory statements.”

The PBM industry has warned that limiting its negotiating power could benefit pharmaceutical manufacturers, resulting in fewer options for consumers and higher overall health care costs.

FTC Commissioner Melissa Holyoak criticized the report in a dissenting opinion in July, saying it did not meet the “rigorous standard” of being “evidence-based, objective, and economically sound.”

“The Report was plagued by process irregularities and concerns over the substance—or lack thereof—of the original order,” Holyoak said at the time.

Express Scripts is calling for the court to vacate the FTC’s report and remove FTC Chair Lina Khan from further PBM-related proceedings. The company warned of ongoing reputational harm and legal challenges unless the report is withdrawn.