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PBMs sue U.S. to keep prescription drug prices hidden from public

3 minute read

REUTERS/Srdjan Zivulovic

  • Industry group says rule exceeds agencies' authority
  • Lawsuit is latest of several to challenge drug pricing rules

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(Reuters) - The Pharmaceutical Care Management Association, an organization representing pharmacy benefit managers, has sued the federal government in an effort to block a rule requiring them to disclose the net prices they negotiate with drug companies.

In a complaint filed Thursday in Washington, D.C., federal court, the PCMA said the November 2020 rule would drive up prescription drug prices. The lawsuit targets the Department of Health and Human Services, Internal Revenue Service and Department of Labor, all of which were involved in the rule.

The agencies did not immediately respond to requests for comment.

Pharmacy benefit managers (PBMs) serve as intermediaries between drug manufacturers, health insurance plans and pharmacies to negotiate prescription drug prices. PBMs typically negotiate concessions below the nominal list prices of prescription drugs.

The PCMA is challenging a provision of the rule set to take effect in January that would require them to disclose the historical net prices (list price minus a rebate) they negotiate with manufacturers. The information would have to be available to the public in a so-called machine-readable file, which can be processed by a computer.

The rule, the organization said, threatens to "drive up the total drug price ultimately borne by health plans, taxpayers and consumers by advantaging drug manufacturers in negotiations over price concessions."

Armed with information about prices negotiated between manufacturers and PBMs, the group said, manufacturers will be able to "tacitly collude with each other to increase drug prices."

The group also said that the rule "offers consumers no actionable information because net prescription drug prices are not charged to consumers and never appear on a bill," and "will likely only confuse them."

Furthermore, it said, ordinary consumers will not be able to interpret a machine-readable file.

The PCMA alleges that the Affordable Care Act does not give the government the authority to require PBMs to disclose proprietary information. It also alleges that the requirement that the information be in a machine-readable file, which received negative comments during the notice and comment rulemaking period, is arbitrary and capricious under the Administrative Procedure Act.

The lawsuit is the latest in a string of healthcare industry challenges to rules passed late in former President Donald Trump's administration aiming to curb prescription drug prices. While it is not yet clear whether President Joe Biden will seek to defend those specific rules, he has also pledged to lower drug prices.

The Biden administration in February agreed to postpone a last-minute Trump administration rule aimed at lowering drug prices by restricting rebates from drug companies to PBMs, which had sued to block the rule.

PhRMA, the nation's largest drug manufacturer group, also won a notable victory last December when a federal judge blocked a rule that would have tied Medicare reimbursement for some drugs to prices paid by other countries.

The case is Pharmaceutical Care Management Association v. U.S. Department of Health and Human Services et al, U.S. District Court, District of Columbia, No. 21-cv-02161.

For the PCMA: Helgi Walker of Gibson, Dunn & Crutcher

For the government: Not available

Read more:

IN BRIEF: Biden administration delays rebate rule

Federal judge blocks Trump administration drug pricing rule

Brendan Pierson reports on product liability litigation and on all areas of health care law. He can be reached at brendan.pierson@thomsonreuters.com.

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