In a previous article, Frier Levitt discussed a significant lawsuit where the three largest PBMs (Caremark Rx L.L.C., Express Scripts Inc., and OptumRx, Inc.), filed against the Federal Trade Commission (“FTC”). The lawsuit, filed in November 2024, sought declaratory and injunctive relief related to the ongoing case between the FTC and these three PBMs. Frier Levitt has closely followed the FTC’s case since it began in September 2024 in which FTC alleged that the PBMs engaged in unfair business practices related to the pricing of insulin. These three PBMs filed a lawsuit to halt the proceeding from going forward based on constitutional claims. However, that endeavor has failed, at least on a preliminary, initial basis.
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. Notably, this is the District Court where Express Scripts’ headquarters is located. The underlying theme of the PBMs’ arguments is the constitutionality, or lack thereof, of the FTC’s administrative proceeding against the PBMs. In advance of these arguments, the PBMs first argued that the FTC’s action against the PBMs violates Article III of the Constitution. Second, the PBMs alleged the FTC Commissioners, and the Administrative Law Judge, are unlawfully insulated from removal in violation of Article II of the Constitution. Finally, the PBMs argued they will not receive a fair hearing in the administrative proceedings in violation of their Fifth Amendment rights. The issue before the Court was whether the Court should prevent FTC’s proceeding from moving forward pending resolution of their constitutional claims.
Court Denies PBMs’ Motion for Preliminary Injunction
This past week, the Court denied the PBMs’ request for a preliminary injunction. The Court ruled in favor of the FTC and noted the PBMs are not likely to succeed on the merits of any of their constitutional claims. The Court noted that the Court was bound by prior precedent and concluded the FTC Act, which governs the FTC, is constitutional—at minimum based on prior precedent. In addition, the Court found the PBMs did not present sufficient proof they would suffer irreparable harm should the administrative proceeding continue, a requirement in granting a motion for preliminary injunctive relief. Specifically, the Court stated the PBMs’ harm is contingent on the validity of their legal theories and thus, the PBMs are unable to show they would suffer great irreparable harm absent a preliminary injunction. In comparison, the Court noted the FTC would be impaired from carrying on its duties that have been established for over a century. The Court also held the public interest, another factor in determining whether to grant a preliminary injunction, weighs in favor of the FTC. The Court stated the public consequences are “self-evident” especially in considering that the PBMs administer 80% of all prescriptions in the United States.
PBMs Appeal Court’s Denial of Preliminary Injunction
Almost immediately after the District Court denied the PBMs’ preliminary injunction request, the PBMs appealed to the Eighth Circuit. As part of the appeal, the PBMs again requested a preliminary injunction enjoining the FTC from continuing its lawsuit while their appeal is pending. In addition, the PBMs stated they will seek injunctive relief from the Eighth Circuit seven days from filing its appeal unless the District Court grants the relief beforehand.
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 including improper terminations, 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.
