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Hawaii Accuses Top Pharmacy Benefit Managers of Illegally Driving Up Prices

Oct 5 (Reuters) – Hawaii has filed a lawsuit accusing the three largest U.S. pharmacy benefit managers of driving up brand-name prescription drug prices through a complex system of rebates and fees, joining other states that have brought similar claims against the drug industry middlemen.

In a complaint filed Wednesday in state court in Honolulu, the office of Hawaii Attorney General Anne Lopez, a Democrat, said that CVS Health’s (CVS.N) Caremark, Cigna Group’s (CI.N) Express Scripts and UnitedHealth Group’s (UNH.N) OptumRx violated state laws against unfair competition and deceptive business practices. The three companies account for about 80 percent of the pharmacy benefit manager (PBM) market.00:24SEC sues Musk to compel testimony in X takeover probe

The state is asking the court to stop the companies from continuing the allegedly illegal conduct, which includes demanding large rebates from drugmakers in exchange for ensuring that their drugs will be covered by health insurance plans, and to award unspecified money damages.

“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, and we will vigorously defend our company against the baseless allegations in this complaint,” Express Scripts said in a statement.

“We believe the allegations are without merit and intend to defend ourselves vigorously,” CVS Health said in a statement. Optum did not immediately respond to requests for comment.

PBMs negotiate with drugmakers, health insurance plans and pharmacies to set prescription drug prices and decide which drugs will be included on their so-called formularies — lists of drugs covered by insurance.

PBMs are meant to negotiate on behalf of the insurance plans to lower drug prices, but critics say they have driven up prices to enrich themselves. The U.S. Federal Trade Commission is currently investigating PBMs’ business practices.

Hawaii said in its lawsuit that, since about 2014, PBMs have demanded larger and larger rebates in exchange for including prescription drugs on their formularies, increasing their own profits while pushing up costs. Rebates are generally offered only on brand-name drugs, not generic drugs.

The PBMs have siphoned even more money in the form of administrative fees, the state said.

“Pay-to-play practices directly harm consumers both by artificially inflating the price of medications beyond what many consumers can pay and by restricting consumers’ access to medications that could save or greatly increase the quality of their lives,” Hawaii Deputy Attorney General Ciara Kahahane said in a statement.

Hawaii joins several other states in taking legal action against PBMs.

California in January sued the PBMs, along with three drugmakers, for allegedly inflating the price of insulin drugs. Ohio in March brought similar claims against Express Scripts and others, and Kentucky sued all three PBMs over insulin in August.

The case is State of Hawaii v. CaremarkPCS Health LLC and others, Circuit Court of the First Circuit, State of Hawaii, No. 1CCV-23-0001281.

For the state: Deputy Attorney General Ciara Kahahane, L. Richard Fried of Cronin, Fried, Sekiya, Kekina & Fairbanks and others

Source : Reuters