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A small mail-order pharmacy, which ships presorted packets of medicines to its customers, is waging a David-versus-Goliath battle with Express Scripts, the nation’s largest pharmacy benefits manager.

For the past two years, PillPack has been part of the Express Scripts network of pharmacies. As a PBM, Express Scripts negotiates prices for medicines on behalf of government agencies, companies, and unions, among others. And as part of its operation, Express Scripts contracts with pharmacies — big and small — where its clients can send their employees or members to have their prescriptions filled.

Recently, though, Express Scripts decided to cancel its contract with PillPack. And TJ Parker, the PillPack chief executive, claims that Express Scripts is making this move because the company doesn’t want another mail-order pharmacy in its network to compete with its own mail order business.


“They try to maintain a monopoly on that part of their business and we’re too much of a threat,” said Parker, who started the company in Manchester, N.H., where its only retail pharmacy is still based. “If we protect antiquated business models, we won’t enable better products and competition to exist, and consumers won’t get what they need.”

He declined to disclose company revenue, but said that Express Scripts currently accounts for about one-third of its revenue and prescriptions filled.


The allegation comes amid escalating controversy over drug prices and growing scrutiny of pharmacy benefits managers and their business practices. PBMs have been criticized for failing to publicly disclose the rebates negotiated with drug makers. Recently, one of the nation’s largest insurers, Anthem, last month filed a lawsuit accusing Express Scripts of failing to pass along rebates.

The Express Scripts spokesman said the dispute with PillPack is purely about contract requirements.

PillPack is “innovative and could be in our network, but hasn’t followed the rules and regulations.” He argued that PillPack ships medicines to some states where it doesn’t have a pharmacy license; declared itself to be a retail pharmacy when it primarily does mail order business; and isn’t accredited by a national health care organization.

Parker countered that PillPack is licensed across the continental United States, although it did encounter administrative problems in one state that have since been corrected.

In any event, the Express Scripts spokesman maintained that “we don’t see them as a threat. “We see them more as a collaborator especially in terms of patient adherence. But they have to follow the rules,” he said.

Although begun as a retail pharmacy, PillPack soon began expanding to home delivery. The company personalizes prescription packaging by sorting multiple medications, regardless of the dosing. In this way, consumers are more likely to remember to take the correct medicines at the correct time.