For the second time since Express Scripts began blocking coverage of hundreds of ingredients used to make compounded medicines, several compounding pharmacies have filed a lawsuit accusing the pharmacy benefits manager of using illegal tactics.
In the latest instance, a half-dozen compounding pharmacies have charged Express Scripts with violating antitrust laws and is attempting to force them out of business. And they allege that other pharmacy benefits managers are conspiring to do the same thing, although none are named as defendants.
Express Scripts has taken “a series of unreasonable restrictions and rules that would make it impossible for [the compounding pharmacies] to fill prescriptions” for patients “and obtain reimbursements that would cover their costs,” according to the lawsuit, which was filed in federal court in St. Louis. The company and the other benefits managers “employed tactics designed to ensure that the compounding pharmacy industry … cannot survive.”
“It’s really a threat to compound pharmacy existence as a whole,” Steven Bloch, an attorney for the compounding pharmacies, told us. The lawsuit estimates that the pharmacies lost tens of millions of dollars in business.
As a pharmacy benefits manager, Express Scripts negotiates contracts for prescription drug coverage on behalf of corporations, government agencies, and unions, among others. In this role, the company helps determine pricing and access through formularies, which are lists of preferred medicines.
Compounding involves making a personalized medicine for a patient. But in 2014, the benefits manager began blocking coverage for ingredients used to make ointments, creams, and powders that are found in topical treatments. The company said the average cost for each prescription jumped to $1,100 from $90, and maintained that less costly medicines are readily available.
“We have no comment on the litigation, but we will vigorously defend ourselves,” an Express Scripts spokesman wrote us. “We also remain committed to help our clients save money by controlling compound spend and providing access to cost-effective alternatives.”
The move to cut back on covered ingredients has riled compounding pharmacies, which have been under a microscope ever since a 2012 outbreak of fungal meningitis was traced to the New England Compounding Center. The episode led to 64 deaths around the country and was described by federal health officials as the worst public health crisis in the United States in decades.
In response, the Food and Drug Administration has cracked down on compounding pharmacies by increasing the number of inspections, and, in rare cases, taking legal action to halt allegedly unsafe practices. The justifiable emphasis on safety has forced many compounding pharmacies to enhance operations, but the move by Express Scripts to limit coverage has further pressured their bottom lines.
The compounding pharmacies are striking back. In November 2014, three others filed a lawsuit claiming Express Scripts illegally blocked legitimate prescriptions and unfairly forced patients to seek more expensive medicines or simply not seek treatment. The pharmacies maintained the benefits manager violated federal law because it lacks authority to essentially alter terms of health plans.
In the latest lawsuit, the benefits manager is accused of increasing rejection rates for claims submitted for compounded medicines; sending “misleading” letters to patients to say the compounded medicines they were prescribed lacked FDA approval and were unsafe; instructing doctors not to write prescriptions for compounded medicines; and creating obstacles for compounding pharmacies to receive reimbursement, among other things.
For the 12-month period beginning on Oct. 1, 2014, through Sept. 30, 2015, the economic impact of the moves made by Express Scripts and other pharmacy benefit managers exceeded $100 million, according to the lawsuit. And the compounding pharmacies allege that about half of that is attributed to the actions taken by Express Scripts.
The plaintiffs are seeking an injunction against Express Scripts and damages to be determined.