Prime Loses Motion; Will Face PBM Price-fixing Arbitration Brought by AHF

Arbitrator denies Prime’s second attempt to dismiss case for fixing, with a direct business competitor, Express Scripts, reimbursement rates paid to independent pharmacies like AHF

AIDS Healthcare Foundation (AHF), the leading provider of health care to people living with HIV/AIDS around the world, notched another significant legal victory in an American Arbitration Association arbitration against Prime Therapeutics LLC, one of the nation’s largest pharmacy-benefits managers (PBMs), which for over four years has been in a questionable business “collaboration” with Express Scripts, Inc. (“ESI”), a direct business competitor. On July 10, 2024, Arbitrator Stuart M. Widman issued a ruling denying Prime’s motion for summary adjudication, allowing the formal arbitration process to move forward.

In June 2023, AHF defeated Prime’s previous attempt to end the entire case, and AHF was allowed to proceed against Prime on claims of antitrust violations, price-fixing with ESI, and other civil wrongs. Arbitrator Cohen retained five of AHF’s seven claims, dismissing only two. (Arbitrator Cohen stepped down as arbitrator shortly afterward.)

Earlier this summer, Prime moved for summary adjudication seeking to have the remaining five claims dismissed, and Arbitrator Widman denied motion.

“Arbitrator Widman, in summary, states that he is leaning toward finding that the Prime-ESI ‘collaboration’ is a per-se (automatic) illegal horizontal price-fixing conspiracy,” said Jonathan M. Eisenberg, Deputy General Counsel for AHF. “This ruling is a terrific outcome in the David and Goliath battle that pharmacies like AHF and others must wage against PBMs to survive. We look forward to now proving our claims in the next phase of the arbitration later this summer.”

Background

Prime is a pharmacy-benefits manager (PBM), a “middleman” in the distribution system for prescription drugs in the United States. Prime acts as a gatekeeper between pharmacies and health insurers.¹ Prime boasts of administering the pharmacy-benefits components of health-insurance plans for about 38 million people in the United States. Many of those people are patients of AHF pharmacies. Since 2020, AHF has filled hundreds of thousands of drug prescriptions for patients whose PBM is Prime.

Since April 2020, Prime has been deliberately aligning its pharmacy reimbursement rates with those set by ESI. The two PBMs are no longer doing what they are supposed to be doing in a free-market system, namely competing on price to attract pharmacies into provider networks. This scheme harms not only AHF and other pharmacies directly but also ultimately harms patients and the entire prescription-drug pipeline in this country.

“AHF continues to have real reason to fear that we may face retaliation from Prime (and ESI) for exposing the price fixing,” added Eisenberg. “However, we take that risk on behalf of the patients we serve and the many other affected independent pharmacies, to try to stop Prime’s unlawful scheme.”

• July 10, 2024, Prime/AHF arbitration summary adjudication ruling link
• June 20, 2023 Prime/AHF arbitration dismissal motion ruling link

AIDS Healthcare Foundation (AHF), the world’s largest HIV/AIDS healthcare organization, provides cutting-edge medicine and advocacy to more than 2 million individuals in 47 countries in the US, Africa, Latin America/Caribbean, the Asia/Pacific Region, and Eastern Europe. To learn more about AHF, visit us online at AIDShealth.org, find us on Facebook, follow us on Instagram and Twitter, and subscribe to our Ahfter Hours podcast.

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¹ Note: Prime is, in fact, owned by a group of Blue Cross and/or Blue Shield health insurers.

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