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Hawaii Targets PBMs With Suit Alleging Unfair Pricing System

  • COURT: Haw. Dist. Ct.

  • DOCKET: No. 1CCV-23-0001281


Hawaii has joined the legal fray against the country’s top companies managing prescription drug benefits, alleging the entities are driving up high drug costs for patients they’re supposed to serve.

CVS Health’s Caremark, UnitedHealth Group’s OptumRx, and Cigna Group’s Express Scripts have “engineered a business model which distorts the market to their benefit, rather than serving the best interest of their client, the payer, or the end consumer, the patient,” Hawaii Attorney General Anne E. Lopez wrote in the complaint filed Wednesday in Hawaii state court.

The lawsuit claims the three pharmacy benefit managers—which together control 80% of the market—violated state laws prohibiting deceptive commercial acts and practices, and unfair methods of competition, among other actions. PBMs manage prescription drug benefits on behalf of health plans and employers, including by negotiating collecting rebates and other fees from drug manufacturers.

“The skyrocketing costs of prescription drugs pose grave challenges to the people of Hawaiʻi,” Lopez said in a statement. “The Department of the Attorney General will work to hold accountable corporations that unlawfully harm patients to increase their bottom lines.” Hawaii follows other states like California, Illinois, and Ohio that have filed lawsuits against PBMs alleging their practices unfairly drive up prescription drug costs for products patents rely on, including insulin. In August, Kentucky sued the top PBMs, along with insulin manufacturers Eli Lilly & Co., Sanofi-Aventis, and Novo Nordisk Inc., arguing they have worked in tandem to increase and fix prices for insulin.

PBMs are also feeling the heat at the federal level with legislation moving through Congress and an ongoing Federal Trade Commission investigation, both aimed at increasing transparency of PBMs’ practices.

Drugmakers have long accused PBMs of forcing them to pay higher rebates in exchange for better placement on formularies, or a plan’s list of covered drugs. Independent pharmacies also say low reimbursements and added fees from PBMs steer patients to PBM-affiliated pharmacies and away from those that serve more rural populations.

PBMs, meanwhile, argue their main mission is to deliver discounts to patients, and that drugmaker price setting and use of patents to delay competition is what’s driving high drug costs in the US.

“We believe the allegations are without merit and intend to defend ourselves vigorously,” CVS Health said in an emailed statement in response to Hawaii’s lawsuit.

Express Scripts also said it plans to push back on what it called “baseless allegations in this complaint.”

“Employers and health plans hire us because of the significant savings and value we deliver year after year to them and the millions of Americans we serve together,” the company said in an email.

Optum said in an emailed statement the “lawsuit is without merit and we will defend against these allegations.”

“We have long been focused on lowering the net cost of prescription drugs, including insulin, for our clients and consumers,” Optum said.

The case is The State of Hawaii v. Caremark, Haw. Dist. Ct., No. 1CCV-23-0001281, complaint filed 10/4/23.


To contact the reporter on this story: Celine Castronuovo at ccastronuovo@bloombergindustry.com

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