In late November 2024, the three largest PBMs, Caremark Rx L.L.C., Express Scripts Inc., and OptumRx, Inc., filed a lawsuit against the Federal Trade Commission (“FTC”) seeking declaratory and injunctive relief related to the pending case between the FTC and these three PBMs. Frier Levitt has closely followed the FTC’s case since it began in September 2024. In the FTC’s case against these PBMs, the FTC has alleged that the PBMs engaged in unfair business practices related to the pricing of insulin. The FTC filed its case after completing a two-year examination of these PBMs, including their related business practices, which resulted in the FTC releasing an Interim Report this past summer. As the FTC’s case continues to proceed as an administrative proceeding, these three PBMs filed this lawsuit attempting to halt the proceeding from going forward based on constitutional claims.
Background of the PBMs’ Lawsuit Against the FTC
The PBMs filed their lawsuit against the FTC in the United States District Court for the Eastern District of Missouri – Eastern Division, which is based in St. Louis, Missouri where Express Scripts is headquartered. This lawsuit mirrors other lawsuits filed against the FTC following the 2023 Supreme Court decision in Axon Enterprise Inc. v. FTC where the Supreme Court held companies facing administrative complaints can go straight to federal courts with constitutional challenges without waiting for administrative proceedings to end. Various companies have filed similar lawsuits against the FTC based on this precedent including Kroger Co. and Meta Platforms, Inc.
PBM Suit Against FTC
In the lawsuit, the PBMs argue the FTC at its core is unconstitutional. The PBMs’ complaint contains four causes of action. The first count alleges the FTC’s in-house proceedings under Section 5 of the FTC Act violates Article III of the United States Constitution. The second count alleges the FTC’s for-cause removal restrictions of FTC Commissioners violate Article II of the U.S. Constitution because the FTC Commissioners are unlawfully insulated from removal. The third count alleges the FTC’s Administrative Law Judge is also unconstitutionally insulated from removal in violation of Article II of the U.S. Constitution. In the fourth count, the PBMs argue they will not receive a fair hearing based on alleged biasness of the FTC Commissioners. The FTC has until December 18, 2024, to oppose or otherwise respond to the lawsuit.
How Frier Levitt Can Help
Frier Levitt represents industry stakeholders, including pharmacies and other healthcare providers across the United States in numerous circumstances and venues including challenging PBM audits, network access issues, unlawful reimbursement practices, and related conduct. Frier Levitt also represents these same stakeholders in litigation in federal courts and state courts, as well as in private arbitration. Additionally, Frier Levitt represents clients in administrative proceedings at both the federal and state level. Our attorneys have experience in analyzing applicable laws, contract terms, reimbursement rates and network agreements, as well as experience in challenging PBM violations of applicable law. Contact us today to speak with an attorney on how your pharmacy can navigate challenges against PBMs.
