Pharmacy Benefit Manager Antitrust

Pharmacy Benefit Managers (PBMs) can play an important function in health care markets by setting up pharmaceutical networks and adjudicating pharmaceutical claims. Serving as brokers for plans between pharmaceutical manufacturers and retailers, PBMs have significant potential to control pharmaceutical costs.  Yet, this market often does not function effectively because of a lack of competition and transparency.  The tremendous consolidation and total regulatory neglect of this market have prevented plans and employers from receiving the full benefits from these PBMs.  In addition, each of the major PBMs have been subject to major enforcement actions securing over $370 million in penalties and fines.

Our office has been at the forefront of efforts to battle egregious, deceptive and anticompetitive conduct by some PBMs.  We have represented health plans, employers, unions, pharmacies, consumer groups, and PBMs on various competition issues.

As Policy Director at the FTC, David Balto was instrumental in bringing some of the first enforcement actions against major PBMs. Our office frequently objects to proposed PBM mergers including AdvancePCS/Caremark, Express Scripts/Caremark and Express Scripts/Wellpoint and authored seminal white papers on the mergers.   David Balto often testifies in front of state legislatures and congressional committees on the cost-saving potential of greater transparency and regulation in the PBM market and has been an expert witness in PBM litigation.  

Recent Testimony:

• Testimony on Pharmacy Benefit Management regulation legislation, Before the California Senate Committee on Business, Profession, and Economic Development, March 20, 2017 
• Testimony on Registering Pharmacy Benefit Managers, Before the Hawaii State Senate, February 10, 2017
• Comments on Pharmacy Benefit Mangers and their contributions to higher drug prices, Before the Federal Trade Commission, December 6, 2017 
• Testimony on the State of Competition in the Pharmacy Benefits Manager and Pharmacy Marketplaces, Before the House Judiciary Committee on Regulatory Reform, Commerical and Antitrust Law, November 17, 2015
• Testimony on Pharmacy Benefit Management MAC Legislation, Before the Vermont Health and Welfare Committee and the House Committee on Health, February 26, 2015 
• Testimony on Pharmacy Benefit Management regulation legislation, Before the Pennsylvania House Committee on Health, October 8, 2013
• Testimony on the ACA, Consildation and the Impact on Competition in Health Care, Before the House Judiciary Committee, Subcommittee on Regulatory Reform, Commercial and Antitrust Law. September 19, 2013.
• David Balto's Testimony on Anti-Mail Order Legislation, Before the Hawaii Legislature. April 12, 2013.
• David Balto's Testimony on PBM MAC Legislation, Before the North Dakota Legislature. March 25, 2013.
• Testimony on the Express Scripts-Medco PBM Merger, Before the Senate Judiciary Committee, Subcommittee on Antitrust, Competition Policy, and Consumer Rights. December 6, 2011.
• David Balto's Testimony on Health Industry Consolidation, Before the House Committee on Ways and Means, Subcommittee on Health.  September 9, 2011.
• David Balto's December 2010 testimony before the Department of Labor on the benefits of PBM transparency.   
• David Balto's February 2010 testimony before the Ohio Senate Insurance, Commerce and Labor Committee addressing the increasing problem of the ownership of pharmacy benefit managers, PBMs, by pharmacy chains.
• David Balto's July 2009 Testimony before the Consumer Protection, Product Safety and Insurance Subcommittee of the Senate Committee on Commerce, Science and Transportation on “Competition in the Health Care Marketplace” -- "The Effects of Regulatory Neglect on Health Care Consumers."
• David Balto's Testimony before the House Judiciary Committee, Antitrust Task Force.  October 18, 2007. "The Impact of our Antitrust Laws on Community Pharmacies and Their Patients." 

Amicus Briefs:

• The Muecke Company, Inc., et al v. CVS Caremark, et al (United States District Court for the Southern District of Texas).  Amicus brief on behalf of the National Community Pharmacists Association opposing CVS Caremark's motion to compel arbitration.
• The Muecke Company, Inc., et al v. CVS Caremark, et al (United States District Court for the Southern District of Texas).  Amicus brief on behalf of consumer organizations Consumer Federation of America, National Legislative Association on Prescription Drug Prices and U.S. PIRG in opposition to CVS Caremark's motion to compel arbitration.

White Papers:

• Inadequacy of the Proffered Efficiency Justifications of the Express Scripts and Medco Merger: White Paper to the Federal Trade Commission explaining the efficiencies claimed by Express Scripts and Medco that will result from their proposed merger are far from sufficient to overcome the presumption of anticompetitive effects resulting from further consolidation in the PBM industry. (February 2012).
• Call for Extensive Investigation of Express Scripts Wellpoint Merger: White Paper to the Federal Trade Commission asking them to conduct an extensive investigation into the competitive impact of the proposed acquisition of Wellpoint’s Pharmacy Benefit Manager (PBM) subsidiary, Next RX, by Express Scripts, Inc.  (May 2009).
• Express Scripts' Proposed Acquisition of Caremark: White Paper urging the FTC to issue a second request and conduct a thorough investigation of Express Scripts' proposed acquisition of Caremark. The paper discusses potential anticompetitive effects of combining two of the largest Pharmaceutical Benefit Management firms in the U.S. (February 2007).

Recent Federal and State Litigation:

• PBM Litigation Summary (Compiled and Summarized by the Law Offices of David Balto).

Articles:

• Mark Meador, Squeezing the Middleman: Ending the Underhanded Dealing in the Pharmacy Benefit Management Industry Through Regulation, 20 Annals of Health Law 77 (2011).  (This paper examines the PBM  industry by describing its operation, analyzing potential antitrust and other legal concerns involved in its ties to health plan sponsors, prescription drug manufacturers, and pharmacies, and evaluating existing proposals for regulating the industry to lower costs for health plan sponsors and consumers.)