Arbitrator denies motion to exclude critical new FTC Report on PBMs

AIDS Healthcare Foundation (AHF), the leading provider of health care to people living with HIV/AIDS around the world, won another legal battle in an American Arbitration Association arbitration against Prime Therapeutics LLC, one of the nation’s largest pharmacy-benefit managers (PBMs).

In a ruling on a pre-trial motion in limine in AHF v. Prime, Arbitrator Stuart M. Widman denied Prime’s request to exclude any reference to the Federal Trade Commission’s July 2024 interim report on PBMs from the upcoming arbitration. The damning interim report, “Pharmacy Benefit Managers: The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies” was issued last month.

“This FTC report treats PBMs fairly harshly, although AHF believes accurately and fairly, and it is good that Arbitrator Widman is willing to consider the report in his deliberations in this case,” said Jonathan M. Eisenberg, AHF’s Deputy General Counsel – Litigation and lead counsel for AHF in the arbitration. “The report has upended the PBM industry and may rouse Congress’ interest in considering PBM and drug pricing reform.”

Background

As a PBM, Prime is a “middleman” in the distribution system for prescription drugs in the United States.¹ Prime acts as an intermediary between health insurers and pharmacies, as well as pharmaceutical manufacturers. Prime boasts of administering the pharmacy-benefits components of health insurance plans for about 38 million people in the United States. Many of those people are patients of AHF pharmacies.

Since April 2020, Prime deliberately has been aligning its pharmacy reimbursement rates with those set by ESI. The two PBMs no longer are competing on price to attract pharmacies into provider networks. This scheme harms not only AHF and other pharmacies directly but also harms patients and the entire prescription drug pipeline.

• July 31, 2024, Prime/AHF Arbitration: Ruling on Motion in Limine to Exclude FTC Interim Report link
• July 10, 2024, Prime/AHF arbitration summary adjudication ruling link

AIDS Healthcare Foundation (AHF), the world’s largest HIV/AIDS healthcare organization, provides cutting-edge medicine and advocacy to more than 2 million individuals in 47 countries in the US, Africa, Latin America/Caribbean, the Asia/Pacific Region, and Eastern Europe. To learn more about AHF, visit us online at AIDShealth.org, find us on Facebook, follow us on Instagram and Twitter, and subscribe to our Ahfter Hours podcast.

¹ Note: Prime is owned by a group of Blue Cross and/or Blue Shield health insurers.

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