October 31, 2016 — The U.S. Department of Justice (DOJ) and two U.S. Attorney’s offices have officially entered the national discussion on drug pricing and the role of Pharmacy Benefit Managers (PBMs) with the initiation of investigatory proceedings against Express Scripts.

In a recent Securities and Exchange Commission filing, Express Scripts disclosed that it has received demands from both the U.S. Attorney’s Office for the Southern District of New York and the U.S. Attorney’s Office for the District of Massachusetts for information related to its operations. From the SEC Filing:

• On August 15, 2016, the Company received a civil investigative demand from the United States Attorney’s Office for the Southern District of New York, requesting information regarding the Company’s relationships with pharmaceutical manufacturers and prescription drug plan clients, and payments made to and from those entities. The Company intends to cooperate with the inquiry and is not able to predict with certainty the timing or outcome of this matter.

• On September 12, 2016, the Company received a subpoena duces tecum from the Department of Justice and United States Attorney’s Office for the District of Massachusetts requesting information regarding relationships between pharmaceutical manufacturers, independent 501(c)(3) charitable foundations providing cost-sharing assistance to federal health care program beneficiaries, and specialty pharmacies. The Company intends to cooperate with the inquiry and is not able to predict with certainty the timing or outcome of this matter.

Express Scripts, the largest PBM in the country, and companies like it have become the focal point for both public and private concerns over the skyrocketing prices of prescription drugs in the U.S. PBMs and their opaque relationships to both drug manufacturers and insurance companies have led to suspicions that while

PBMs are making record profits, they are also distorting the normal price signals in the market for pharmaceuticals. PBM involvement in the mail-order pharmacy business, control of formularies, and operation of patient assistance programs add to the perception that their all-pervasive presence in the pharmaceutical supply chain is ultimately having a negative impact on the price and availability of prescription drugs.

PBMs like Express Scripts have long kept their financial dealings with drug manufacturers, their rebate plans, and their pricing schemes with insurance providers under wraps as “proprietary” company information. The initiation of federal inquiries, and a number of ongoing civil actions involving both Express Scripts and other PBMs, may indicate that the PBM’s days of closely-guarded secrets may be coming to an end.

The FisherBroyles Pharmacy Law team will continue to track the course of the federal investigations into Express Scripts and other PBMs, as well as other matters of importance to pharmacies. We welcome your questions, so please do not hesitate to contact any one of the following attorneys:

Brian Dickerson, FisherBroyles Partner
Brian E. Dickerson
brian.dickerson@fisherbroyles.legal
202.570.0248

Nicole Waid, FisherBroyles Partner
Nicole Hughes Waid
nicole.waid@fisherbroyles.legal
202.906.9572

Anthony Calamunci, FisherBroyles Partner
Anthony J. Calamunci
anthony.calamunci@fisherbroyles.legal
419.376.1776

Amy Butler, FisherBroyles Partner
Amy L. Butler
amy.butler@fisherbroyles.legal
419.340.8466

 

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