Attorney General Fitch sues pharmacy benefits managers over opioid epidemic

• Pharmacy benefits managers were designed to help lower prescription drug costs. In a new lawsuit, Mississippi AG Lynn Fitch alleges they colluded with drug manufacturers to sell addictive opioids.

Since taking office, Mississippi Attorney General Lynn Fitch has participated in a series of national lawsuits and settlements with manufacturers, distributors, and marketers of opioids. On Thursday, Fitch filed a lawsuit in Hinds County Chancery Court identifying a new target: pharmacy benefits managers (PBMs).

Fitch’s lawsuit alleges that PBMs colluded with opioid manufacturers to flood the market with cheap opioids, spurring an addiction crisis. The complaint describes the opioid crisis as the “worst man-made epidemic in modern medical history,” and one that “ravaged Mississippi.”

Pharmacy benefits management was designed to reduce prescription drug costs for consumers. Because they work in conjunction with pharmacy networks that buy drugs in bulk, PBMs maintain leverage to negotiate lower prices and rebates with drug manufacturers. They also create “formularies,” which are approved drug lists designed to identify low-cost, preferred options for treating certain conditions.

Fitch’s lawsuit alleges that two of the three largest PBMs in the country, Optum and Express Script, obtained rebates from opioid manufacturers that made opioids less expensive than safer alternatives. The complaint contends that as part of this rebate arrangement, PBMs agreed to list opioids on the formulary lists for pain management while ignoring safety concerns.

The Biden White House has targeted PBMs in recent years. The Federal Trade Commission, in July of this year, released a report arguing that PBMs have become anti-competitive because of industry consolidation and vertical integration with pharmacies and health insurance plans. U.S. House Republicans have also questioned the efficacy of PBMs in reducing drug costs in recent hearings.

The Attorney General’s suit adopts some of these same arguments.

In a statement announcing the lawsuit, Fitch said the opioid epidemic is tearing apart families and community in Mississippi.

“I will continue to hold these companies accountable for the role that they have played in destroying so many lives through their unfair, deceptive practices so that our state can heal from this crisis and guard against it ever happening again,” Attorney General Fitch said.

Fitch’s office noted that over the past several years, the Attorney General has entered into settlements with more than a dozen companies – manufacturers, distributors, pharmacy chains, and even companies that created the marketing plans – that played a part in creating and amplifying the opioid crisis. In total, the AG said those lawsuits will bring north of $367 million to Mississippi over the next 18 years.

The Other Side

According to the Pharmaceutical Care Management Association (PCMA), a trade association that represents PBMs, more than 275 million Americans have health insurance that includes PBM administered prescription drug plans, ranging from commercial health insurance to Medicare and Medicaid.

PCMA estimates that PBMs negotiation of lower drug prices will save health plan sponsors and consumers more than $1 trillion on prescriptions over the next ten years. That works out to $1,040 annually for each patient and their insurance provider.

The industry also claims that formulary lists are developed on the recommendations of independent pharmacists, physicians and clinicians.

For instance, a white paper published by Express Script, one of the two PBMs named by Fitch, says its top consideration in developing its formulary list is the “clinical appropriateness of the drug, not cost,” and that its “clinically sound formularies” are “based on evaluations of independent physicians.”

It also notes that “the prescribing physician always makes the final decision regarding an individual patient’s drug therapy.”