Whether Express Scripts wins its unique defamation lawsuit will depend on whether the PBM can prove the FTC made false statements. But winning the lawsuit may not be what the PBM is looking for.
The lawsuit that Express Scripts filed yesterday against the Federal Trade Commission may be an attempt to reset the narrative about pharmacy benefit managers (PBMs), according to several people Formulary Watch spoke with.
Over the past several years, the PBM industry has come under increased scrutiny from news organizations, congressional committees and watchdog groups. The FTC launched an investigation two years ago, and its interim report, issued in July 2024, was critical of the industry.
Vertical integration, the FTC said, has allowed PBMs to profit at the expense of patients and independent pharmacists. This consolidation has given the large PBMs significant power and influence, created incentives to prefer their own organizations, led to conflicts of interests, steered patients to their own pharmacies and developed unfair contracts with independent pharmacies.
Express Scripts struck back yesterday with 58-page defamation lawsuit, an updated website that aims to show the value that PBMs provide and a full-page ad in the New York Times.
Express Scripts alleges that the agency made unsubstantiated, false and biased claims about the PBM industry in its interim report. Express Scripts said that the FTC followed “prejudice and politics, not evidence or sound economics,” and that FTC Chair Lina M. Khan has anti-PBM bias and that even before she was appointed to the agency.
The PBM trade association, the Pharmaceutical Care Management Association (PCMA), continues to say that the FTC report doesn’t provide a fact-based assessment of the industry.
"Anecdotes and comments from anonymous sources and self-interested parties, supported only by cherry-picked case studies that are implied to be representative of the entire market, is damaging to our companies’ ability to rein in costs for the employers and patients we serve, driving costs up everywhere in the healthcare system and helping only Big Pharma,” PCMA president and CEO JC Scott said in a statement.
Other PBMs discussed in the FTC report have also defended the work they do. David Whitrap, the vice president of external affairs at CVS Health, one of the so-called "big 3" PBMs, told Formulary Watch that the FTC interim report has been criticized by multiple independent experts and that two FTC Commissioners, Melissa Holyoak and Andrew Ferguson, issued dissenting opinions saying that the report lacked sufficient empirical data and analytical rigor (Ferguson, however, ultimately supported release of the report). “Contrary to the insinuations in that interim report, independent outside economists have reviewed the terabytes of data and documents we provided the FTC and determined that CVS Caremark substantially reduces drug costs for American employers, unions, patients, and taxpayers,” Whitrap said.
it appears that Cigna/Express Scripts are “leading this charge to challenge the veracity and credibility of the FTC interim report,” Lucas W. Morgan, a partner at Frier Levitt’s Healthcare and Life Sciences groups, a firm that handles disputes with PBM, said in an interview. “They must feel like they have some basis to pursue these claims.”
Morgan noted that Express Scripts filed the lawsuit in a court, the Eastern District of Missouri within the 8th circuit, where the company has had success in prosecuting cases and defending cases.
Morgan and others believe it’s going to be challenging for Express Scripts to prove a defamation case based on the FTC’s interim report. The suit has be widely criticized by organizations and people on Linkedin and X. The AIDS Healthcare Foundation (AHF) called the suit meritless. Attorney David Balto, who was policy director of the FTC from 1997 to 2001, said “the Express Scripts lawsuit is on a fast track towards dismissal, devoid of any legal foundation or public policy merit.” The American Economic Liberties Project weighed in saying the lawsuit was a “hollow, desperate bid avoid accountability.”
“From a legal standpoint, they [Express Scripts] have a very tall order in front of them,” Morgan said. “I’m speaking in very broad, general terms and not with in-depth analysis of Missouri law on defamation. Generally speaking, in a defamation case, you have to be able to prove that the statements that were made that you claim are defamatory are false.”
Joseph Shields of TransparencyRx pointed out other public documents exist that indicate that Express Scripts and other PBMs engaged in behavior that is questionable. “The FTC report is not an isolated report,” he said in an interview.
Morgan believes the lawsuit is a form of public rebuttal to the FTC’s interim report. “This is another level now, and much more aggressive,” he said.
Not long after the FTC report, Senate Finance Committee Chair Ron Wyden, (D-Ore.) called for PBM reforms. And the House Oversight Committee held hearings in July in which both Republican and Democrat lawmakers questioned PBM leaders on their role in rising prescription drug costs.
Following those hearings, Chairman James Comer (R-Ky.) issued a report that said that three largest PBMs have used their position as middlemen “to enact anticompetitive policies and protect their bottom line.” The Committee’s report indicated that PBMs use opaque pricing to overcharge plans and payers, use rebates to favorable formulary placement, and employ utilization management tools that impact patient health outcomes.
Express Scripts sued the FTC because they can’t sue Congress, Ben J. Widlanski, a partner of Kozyak Tropin & Throckmorton, is currently co-lead counsel in insulin pricing litigation against pharmaceutical companies and PBMs, said in an interview.
“This is an offensive play,” he said. “Maybe they’re tired of sitting on defense. They were on defense in front of the Senate, the House, the FTC, various state attorneys general and various civil lawsuits.”
It’s also possible that Express Scripts is hoping this lawsuit opens the door to challenging the constitutionality of the FTC, Widlanski said. “There have been numerous challenges to the authority bounds of executive agencies over the last few years, some of which have been successful and some of which have not. Maybe the hope is they can continue the trend and limit or clip the wings of the FTC.”
Widlanski said the lawsuit itself is questionable. “Express Scripts said FTC's report relies on public comments, which are anonymous, and not the information that the PBM’s submitted. The FTC said in its report that the PBMs had not fully cooperated with the investigation or provided all the information requested which is also what the Senate said when it issued its report.”
If the lawsuit is not dismissed, it’s possible that Express Scripts may have to provide additional documentation through the discovery process. Morgan suggests that Express Scripts could argue for limited discovery of the data and information that has already been supplied to the FTC.
“But I don’t think this is going to get to discovery,” Morgan said. “I think this is a move to put some pressure on the agency and the agency’s leadership to issue a statement clarifying the report in a manner that satisfies Express Scripts.”