Pharmacy benefit managers (PBMs) OptumRX, ExpressScripts, and CVS Caremark have more than $200 billion per year in revenue and control almost 80% of the industry—and the complaint for this class action alleges that they do it by engaging in schemes for their own profit, violating their fiduciary duties to health plan consumers.
Do PBMs have a fiduciary duty to welfare plans governed by the Employee Retirement Income Security Act (ERISA)? And what does this have to do with the skyrocketing price of EpiPens?
The class for this action is all individuals in the US and its territories enrolled in ERISA-covered health plans for which any of the PBM defendants manages pharmacy benefits, who purchased an EpiPen through the plan and had to pay a portion of the price based on an inflated list price.
EpiPens are auto-injectors for epinephrine, designed to treat anaphylaxis, a severe allergic reaction that can cause death. It can happen quickly. Eat a bite of the wrong food, feel your throat start to close, take more than 30 minutes to get to the hospital, and that’s the end of your life.
According to the complaint, approximately 15 million people in the US have serious food allergies, including one in every thirteen children, and approximately 200,000 have an episode of anaphylaxis each year. People who are prone to anaphylaxis are advised to carry auto-injectors at all times.
EpiPens, the most popular auto-injectors, have been around since the 1980s, but in 2007, Mylan acquired the worldwide right to market them. Mylan hiked the price, packaged them in pairs, and the cost went from roughly $57 per EpiPen to around $608 per pack in 2016.
According to the complaint, this is not because of new technology, and the total cost of making an EpiPen two-pack is $8-$10. In fact, the complaint claims that PBMs are at fault, in a scheme to defraud consumers.
PBMs were originally an advantage. They administered health insurers’ prescription programs, by developing formularies (lists of prescription drugs covered), processing claims, and creating networks of pharmacies that give discounts. If pharmacies wanted to sell consumers more expensive drugs, for example, independent PBMs could exclude them from their formularies in favor of similar, cheaper ones.
Over time, though, the complaint alleges that PBMs developed their relationships in this system into a scheme marked by kickbacks and increasing control of product choice. The complaint charges that PBMs have even been buying pharmacies and have thus lost all incentive to keep drug costs lower. According to the complaint, PBMs now choose drugs based not on the good of the consumer but on the size of the kickback from the manufacturer.
This forces competitors to charge higher prices so that they too can pay high “rebates.” When a competitor introduced the Auvi-Q auto-injector in 2017, the complaint says, it wasn’t priced lower, to benefit consumers; it was priced at $4,500, “due in part to the effect of rebates” so that the company could compete with Mylan. Meanwhile, a little-known alternative called the Adrenaclick is sold for $142—but does your insurer’s PBM include it in its formulary?
The ultimate victim of the scheme is the consumer, who pays more via retail prices, co-pays, deductibles, and premiums.
The complaint alleges that PBMs have fiduciary duties toward participants in healthcare plans under ERISA and that PBMs have breached these duties by engaging in prohibited, self-interested acts and by engaging in extortion and deception at the beneficiaries’ expense.
Article Type: LawsuitTopic: Consumer
Most Recent Case Event
EpiPen Pharmacy Benefits ERISA Complaint
August 29, 2017
Pharmacy benefit managers (PBMs) OptumRX, ExpressScripts, and CVS Caremark have more than $200 billion per year in revenue and control almost 80% of the industry—and the complaint for this class action alleges that they do it by engaging in schemes for their own profit, violating their fiduciary duties to health plan consumers. Over time, the complaint alleges, PBMs developed their relationships in the healthcare system into a scheme marked by kickbacks and increasing control of product choice. According to the complaint, PBMs now choose drugs based not on the good of the consumer but on the size of the kickback from the manufacturer. The ultimate victim of the scheme is the consumer, who pays more via retail prices, co-pays, deductibles, and premiums. The complaint alleges that PBMs have breached fiduciary duties toward participants in healthcare plans under ERISA.
express_scripts_erisa_complaint.pdfCase Event History
EpiPen Pharmacy Benefits ERISA Complaint
August 29, 2017
Pharmacy benefit managers (PBMs) OptumRX, ExpressScripts, and CVS Caremark have more than $200 billion per year in revenue and control almost 80% of the industry—and the complaint for this class action alleges that they do it by engaging in schemes for their own profit, violating their fiduciary duties to health plan consumers. Over time, the complaint alleges, PBMs developed their relationships in the healthcare system into a scheme marked by kickbacks and increasing control of product choice. According to the complaint, PBMs now choose drugs based not on the good of the consumer but on the size of the kickback from the manufacturer. The ultimate victim of the scheme is the consumer, who pays more via retail prices, co-pays, deductibles, and premiums. The complaint alleges that PBMs have breached fiduciary duties toward participants in healthcare plans under ERISA.
express_scripts_erisa_complaint.pdf