Bloomberg Law
March 29, 2023, 5:25 PMUpdated: March 29, 2023, 7:01 PM

Drug Price-Sharing Strategy Imperiled by Ohio Antitrust Suit (1)

Celine Castronuovo
Celine Castronuovo

Ohio’s antitrust lawsuit against Express Scripts Inc., Humana Pharmacy Solutions and other companies opens a potentially effective legal front against the embattled pharmacy benefit manager industry.

The complaint by Ohio Attorney General Dave Yost (R) appears to be the first state attempt to target group purchasing organizations, also known as “rebate aggregators,” drug pricing researchers and independent pharmacy spokespeople said.

The PBMs began using group organizations amid scrutiny over insulin pricing on Capitol Hill and administrative action targeted at the rebates drug manufacturers pay to PBMs. Now, that strategy is under attack as well.

Group purchasing organizations “provided PBMs an opportunity to keep some of the negotiated rebates, or related administrative fees, even as scrutiny on rebates increased,” said Erin Trish, co-director of the USC Schaeffer Center for Health Policy & Economics.

“It’s sort of like a game of whack-a-mole,” Trish added. “Increase scrutiny on rebates, and PBMs respond by moving those dollars through another organizational structure and calling them something else.”

Yost alleges that pharmacy benefit managers Express Scripts, Prime Therapeutics LLC, and Humana Pharmacy Solutions have used a Switzerland-based company, Ascent Health Services, to share pricing, rebate, and discount information in violation of state antitrust law.

That allowed the PBMs—which manage prescription drug benefits on behalf of health plans and employers—to drive up the prices of life-saving products like insulin, Yost alleged. He is seeking a permanent injunction to constrain the defendants’ business practices.

The case “could force PBMs to change their way of doing business” if the state wins, said Michael Carrier, a Rutgers Law School antitrust professor.

“I don’t know the merits of Ohio law, but the claims against PBMs generally seem strong,” Carrier said. “The defendants may claim that claims based on state antitrust law are preempted by federal antitrust law, but we’ve had state antitrust laws for a long time.”

Market Power

Ascent, Express Scripts and Humana didn’t immediately respond to requests for comment.

A Prime Therapeutics spokesperson said the company doesn’t comment on pending litigation, but that Ascent “negotiates pharmaceutical relationships and savings opportunities for the purpose of improving affordability for members and plan sponsors across Prime’s client base, including Prime’s Blue Cross and Blue Shield owners.”

In addition to Ascent, which Express Scripts first launched in 2019, CVS Caremark formed its own GPO, called Zinc in 2020, and OptumRx started Emisar Pharma Services in 2021.

PBMs have said the group organizations help to more effectively negotiate pricing and rebates with drug manufacturers, and that PBMs deliver discounts to patients. The PBM industry points to drug manufacturer list prices and overlapping patents, known as patent thickets, as the main sources of high US drug costs.

The pharmaceutical industry and independent pharmacies argue that PBM fees and integration with major health plans and pharmacy chains have driven up drug costs and limited choices for consumers.

The emergence of GPOs like Ascent is indicative of the growing market power of PBMs, and a sign that action is needed from the courts and Congress, Matthew Seiler, general counsel of the National Community Pharmacists Association, an independent pharmacy trade group, said.

Seiler argued that the PBM practices steer patients to their affiliated pharmacies, ultimately hurting local pharmacy chains and the patients they serve.

“I’m hopeful that other states will pay attention to this lawsuit and really analyze what’s happening in their states, because we’re pretty confident it’s across the board,” Seiler said.

Congress is also scrutinizing the group purchasing organizations. On March 1, the House Committee on Oversight and Accountability launched a probe into the country’s three largest PBMs—CVS Caremark, Express Scripts, and OptumRx. The committee asked for details on each of the three PBMs’ group purchasing organizations.

“These GPOs add another layer of complexity in the pharmaceutical distribution system,” Trish said. “While PBMs argue that the larger scale enables them to negotiate better prices with manufacturers, it also makes it that much harder for employers and other end clients to understand what is going on with their contracts.”

Insulin Pricing

The GPOs from the leading PBMs first emerged amid scrutiny from Congress and the Trump administration over the degree to which PBMs were profiting from the rebates, and whether they were passing them along to health plans and the patients they cover.

In 2019, a Senate Finance Committee report on insulin prices measured significant gaps in the list prices of these drugs and their negotiated price with discounts.

The committee has scheduled a hearing Thursday centered on PBMs and “the prescription drug supply chain’s impact on patients and taxpayers,” with planned testimony from drug pricing experts.

That same year, President Donald Trump proposed a rule that would eliminate the anti-kickback safe harbor protections rebates drug manufacturers pay to PBMs in exchange for better placement on health plan formularies. The Inflation Reduction Act enacted last year delays implementation of the rule until 2032.

The argument that the size and scale of PBMs could help yield better discounts has merit, said Antonio Ciaccia, CEO of Ohio-based drug pricing data firm 46brooklyn Research. Ciaccia’s firm 3 Axis Advisors provides general consulting services to Yost’s office.

“The question is whether or not that is done in an anti-competitive manner,” Ciaccia said.

The case is Ohio v. Ascent Health Services, LLC, Ohio Ct. Com. Pl., No. 23-cv-H-03-0179, Complaint filed 3/27/23.

(Updated with additional reporting. Earlier version corrected reference to firm in twenty-third paragraph.)

To contact the reporter on this story: Celine Castronuovo at

To contact the editors responsible for this story: Keith Perine at; Karl Hardy at

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