Overview
In a previous article, Frier Levitt discussed the Federal Trade Commission’s (“FTC”) complaint (“Complaint”) filed against the three largest Pharmacy Benefit Mangers (“PBMs”) and their affiliated Group Purchasing Organizations (“GPOs”) based on allegations of engaging in anticompetitive and unfair rebate practices. As noted in that article, on September 20, 2024, the FTC filed an administrative complaint against the three largest PBMs in the country: Caremark, Express Scripts, and Optum Rx, along with each PBM’s affiliated GPO (“Respondents”). [1] The FTC’s complaint comes after its two-year examination of the PBMs, which resulted in the FTC issuing an Interim Report this past summer. In the Interim Report, the FTC shared its findings and conclusions, which included pronounced concerns about the PBMs’ various business practices including issues related to reimbursement and rebates. Since the filing of the complaint, there have been several developments and new filings in the case, including a concerted effort by the PBMs to challenge the FTC’s case, including by strategically challenging the commissioners and moving for their disqualification from the proceedings.
Recent Updates
While stakeholders have been waiting for the Respondents to file their Answer to the Complaint, the Respondents have also made other filings related to the case. On October 8, 2024 Respondents filed Motions for Disqualification (“Motions”) of the Commission’s Chair Lina M. Khan and Commissioners Alvaro M. Bedoya and Rebecca K. Slaughter. [2] In the Motions, Respondents argue that the FTC’s case is inherently biased and violates due process. Among other arguments raised by the Respondents to show possible bias, the Respondents point to many of the allegations and statements made against them by Commissioner Lina M. Khan, Commissioner Alvaro M. Bedoya, and Commissioner Rebecca K. Slaughter. Respondents allege the three Commissioners have made public statements that show bias against the PBMs and their affiliated GPOs. Respondents allege these public statements preceded even the examination of the PBMs and are evidence that the Commissioners’ minds are already “made-up” on the legal issues in the Complaint and amount to improper bias. For example, the Respondents specifically note Khan’s attendance at the National Community Pharmacist Association even in 2022 where PBMs were depicted as vampires.
The Motion will first be addressed by the Commissioners whose disqualifications are sought. [3] In the event such Commissioners decline recusal from participation in the proceeding, the Commission shall determine the motion without the participation of such Commissioners. [4] Motions for Disqualification are a somewhat common tactic among corporations facing complaints filed against them by the FTC. Amazon and Meta have also previously filed motions for Commissioner Khan to be disqualified, which she has refused to do. [5] This strategy by the PBMs indicates the PBMs are wary of the potential outcome of the FTC’s Complaint.
How Frier Levitt Can Help
Frier Levitt represents industry stakeholders, including pharmacies and other healthcare providers across the United States in challenging PBM audits, network access issues, unlawful reimbursement practices, and related conduct. Frier Levitt also represents these same stakeholders in litigation in federal state court as well as in private arbitration and further in administrative proceedings at both the federal and state level. Our attorneys have experience in analyzing contract terms, reimbursement rates and network agreements as well as experience in challenging PBM violations of state law. Contact us today to speak with an attorney on how your pharmacy can navigate challenges against PBMs.
[1] the FTC’s Complaint can be found at https://www.ftc.gov/legal-library/browse/cases-proceedings/221-0114-caremark-rx-zinc-health-services-et-al-matter-insulin.
[2] Respondents’ Motions for Disqualification can be found at https://www.ftc.gov/legal-library/browse/cases-proceedings/221-0114-caremark-rx-zinc-health-services-et-al-matter-insulin
[3] 16 C.F.R. § 4.17(b)(3)(i)
[4] 16 C.F.R. § 4.17(b)(3(ii)
[5] Meta’s Petition for Recusal of Chair Lina M. Khan can be found at: https://www.ftc.gov/system/files/ftc_gov/pdf/d09411_petition_for_recusal_combined.pdf
