Michigan Sues PBMs for Alleged Anticompetitive Conduct Impacting Independent Pharmacies

In the latest example of enforcement action against pharmacy benefit managers (“PBMs”), Michigan Attorney General Dana Nessel recently filed an antitrust lawsuit in federal court against Express Scripts, Inc. and Prime Therapeutics LLC, alleging the two PBMs engaged in an unlawful agreement to suppress pharmacy reimbursement rates and harm competition (the “Complaint”). The Complaint, brought under both federal and Michigan antitrust statutes, as well as Michigan’s public nuisance law, asserts that the PBMs’ conduct has driven closures of independent pharmacies and contributed to the rise of “pharmacy deserts” across the state.

This case continues a trend of aggressive federal and state scrutiny of PBM conduct, especially in the wake of increased consolidation and vertical integration in the pharmacy benefit management industry. Health plans, PBMs and pharmacies operating in Michigan and other states should closely monitor this litigation, which may have implications for PBM pharmacy network contracting, reimbursement practices, network arrangements and competition policies.

Background

PBMs act as intermediaries between health plans, pharmacies and drug manufacturers, negotiating rebates, facilitating pharmacy reimbursement and managing pharmacy networks. Express Scripts and Prime are among the nation’s largest PBMs, with Prime affiliated with nonprofit Blue Cross and Blue Shield plans and Express Scripts operating under The Cigna Group umbrella.

The Complaint

According to the Complaint, Prime and Express Scripts entered into a network “collaboration agreement” in late 2019 under which Prime outsourced its commercial pharmacy network to Express Scripts in exchange for a fee and access to Express Scripts’ negotiated rates and infrastructure. The Complaint alleges that this agreement eliminated Prime as an independent competitor in the Michigan pharmacy reimbursement market, allowing Express Scripts to apply lower reimbursement rates across the board and resulting in suppressed payments to unaffiliated, independent pharmacies. Additionally, the State of Michigan (the “State”) alleges that the suppressed reimbursement rates were in many cases lower than pharmacies’ actual cost to dispense medications, a dynamic that has driven some pharmacies out of the market and exacerbated “pharmacy deserts,” particularly in underserved urban areas like Detroit.

The State seeks to dissolve the agreement between Express Scripts and Prime and enjoin further conduct that could harm market competition or access to care. Further, the State alleges that the PBMs’ conduct violates:

• The federal Sherman Antitrust Act;
• The Michigan Antitrust Reform Act; and
• Michigan’s public nuisance law.

Analysis

The lawsuit comes amid increasing scrutiny of PBM practices and could serve as a playbook for other state Attorneys General seeking to further regulate PBMs. While the facts in this case are distinct, conceptually, the lawsuit is not the first of its kind. In March 2023, the Ohio Attorney General brought suit in the U.S. District Court for the Southern District of Ohio against Express Scripts, Humana and Prime, alleging that the PBMs engaged in anticompetitive conduct that inflated drug prices and harmed independent pharmacies in Ohio. In January 2024, U.S. District Judge Michael H. Watson granted the Ohio AG’s motion to remand the case back to the Delaware County Court of Common Pleas. That same day, the defendants appealed the remand order to the U.S. Court of Appeals for the Sixth Circuit, where the case is currently pending.

In September 2024, the Federal Trade Commission (“FTC”) filed an administrative complaint against the “Big Three” PBMs (Express Scripts, OptumRx and Caremark Rx) and their affiliated group purchasing organizations, alleging that their rebate practices artificially inflated insulin prices in violation of Section 5 of the FTC Act.

Meanwhile, as part of its ongoing investigation of PBM practices, the FTC released a report in January 2025, highlighting how the Big Three PBMs collected over $7.3 billion in revenue between 2017 and 2022 by marking up drug prices at their affiliated specialty pharmacies. While the FTC report has fueled calls for increased regulation, PBMs maintain that their negotiating leverage and formulary management deliver critical savings to employers, government programs and patients in an increasingly expensive pharmaceutical market.

Finally, states have been active in passing PBM legislation affecting various aspects of PBM practices, and PBM legislation is also being proposed at the federal level.

Practical Takeaways

• Pharmacies should monitor this case closely, as its outcome could affect reimbursement negotiations and PBM network inclusion.
• Health plans working with PBMs should consider reviewing their contracts to ensure they align with antitrust risk mitigation strategies.
• PBMs should continue to monitor this case as well as the wide array of state and federal legislative and enforcement activity facing PBMs, as state and federal agencies continue to examine the competitive effects of consolidated pharmacy networks and pricing structures.

Hall Render will continue to monitor this litigation as well as other PBM industry developments. Hall Render routinely works with pharmacies, health plans and PBMs on a wide range of PBM contracting, reimbursement, licensing and regulatory issues.

If you have questions or would like more information about this topic, please contact:

• Julie Lappas at (317) 977-1490 or jlappas@hallrender.com;
• Michael Greer at (317) 977-1493 or mgreer@hallrender.com;
• Kennedy Bunch at (317) 977-1420 or kbunch@hallrender.com; or
• Your primary Hall Render contact.