More Ammo from the American Postal Workers Union Health Plan Audit Could Strengthen FTC's PBM Litigation on Insulin

Some may recall that on July 10, 2024, the Wall Street Journal, Politico and Axios all reported that the U.S. Federal Trade Commission ("FTC") intends to sue the largest Pharmacy Benefit Managers (PBMs) perhaps by the end of July 2024 (although the exact date remains to be seen), and specifically over its business practices related to insulin for "allegedly using negotiating tactics in order to steer patients to use more expensive drugs" (such as heavily-rebated brand-name versions of insulin, rather than less-costly unbranded insulins or even genuine biosimilars where they exist; so far, most are Lantus biosimilars, with only Sanofi's biosimilar of Lilly's Humalog which is branded as Admelog have been approved by FDA as of the date this particular post is published). Politico's version of the article was free; hence I will refer you to its coverage at https://www.politico.com/news/2024/07/10/ftc-pharmacy-insulin-drug-00167342 for details.

While the PBM's and its trade organization known as the Pharmaceutical Care Management Association (PCMA) have cited what they argue are insufficiencies in the FTC Interim report's data, while conveniently overlooking the reality that there's already a robust set of data on insulin from the Senate Finance Committee, and from academic sources including from the University of Southern California which FTC can include and cite in any FTC litigation against the PBMs on insulin. 

Now, yet another piece of publicly-available data emerged at the end of March 2024 from a report from an audit (see the report at https://www.oversight.gov/sites/default/files/oig-reports/OPM/2022-SAG-029_0.pdf for complete details) undertaken by the American Postal Workers Union Health Plan's pharmacy operations as administered by Cigna's Express Scripts business for contract years 2016 through 2021. The audit was undertaken by the U.S. Office of Personnel Management Office of the Inspector General's Office of Audits, which rather quietly released the result of a comprehensive audit.

While the Postal Workers Pharmacy Benefit Manager (PBM) audit and its accompanying report received little if any public attention at the time, it examined drug spending between 2016 and 2021 within the health plan that covers more than 200,000 unionized U.S. Postal Service mail carriers and post office workers, as well as retirees. The audit revealed that Cigna's Express Scripts PBM unit had overcharged U.S. Postal Service employees a stunning $45 million for their prescription drugs during that five-year period. 

STAT News reporters Ed Silverman and his colleague Bob Herman commented (if you subscribe to STAT, see the complete article at https://www.statnews.com/2024/07/22/express-scripts-overcharged-postal-workers-by-45-million-audit-says/ — I'm not a paid subscriber to STAT News, but I am on the free email Newsletters distribution list for both Ed Silverman and for Bob Herman and their STAT News reporting, so I occasionally receive emails with their coverage and can read their articles using the links contained in their emailed Newsletters at no charge. Alas there's no way for new subscribers to go back to already-distributed Newsletters), when they wrote:

"This part really caught our eyes: The biggest source of overcharges was tied to drug rebates that should not have been kept by [Cigna's/Evernorth's/Express Scripts'] Ascent Health Services, the opaque, Swiss-based group purchasing organization that is a sister organization to Express Scripts. (FYI "GPO" which is another entity aside from PBMs which receives a controversial "safe-harbor" exemption to the federal Antikickback Statute which effectively renders them able to collect legally-exempted rebate kickbacks)."

They added:

"Notably, nearly half of the overcharges stemmed from drug rebates that Express Scripts negotiated with pharmaceutical companies. But instead of passing back 100% of that money to the health plan, as the contract required, the PBM skimmed millions for itself, according to the audit, which was conducted by the Office of Inspector General for the Office of Personnel Management." 

Note that the choice of the word "skimmed" is rather curious to me. 

The term "skim" implies that Express Scripts took just a little bit as if to cover their expenses, but really, it is a question of magnitude. When the amount "skimmed" amounts to more than $45 million dollars, that means it wasn't "skimmed" — it was stolen. And thievery implies a lawsuit to get the money which was stolen returned by a Court of Law. Hence the next reveal was really interesting: STAT News acknowledged that the company [Express Scripts] agreed to fully refund all of those wrongly-retained rebates. 

But, more importantly, the point is that PBMs operate as if their "safe-harbor" exemption also somehow exempts the PBMs' from being sued for breaking a contract which they signed and agreed to, and that is completely untrue. 

The only reasons Express Scripts' and its Ascent Health Services GPO unit agreed to refund the $45 million in money to the American Postal Workers Union Health Plan is because: 

1. the American Postal Workers Union Health Plan had conducted a legitimate audit, which means it had legitimate grounds for a lawsuit against Express Scripts, and Express Scripts would likely have lost any litigation if the American Postal Workers Union Health Plan actually took them to court and 
   
   
2. the only thing PBMs want to do less than refund cash they had effectively stolen (skimmed being a euphemism for stolen) is to go to court and open their business practices and records up to a court docket which then becomes public record

Express Scripts simply opted to take the easier and safer way out and just refund the $45 million which it had effectively stolen from the American Postal Workers Union Health Plan without admitting they did anything wrong. There was nothing benevolent about the Express Scripts decision; it was a very calculated business decision, and nothing more. 

Note that in my previous blog post (see it at https://blog.sstrumello.com/2024/07/let-litigation-against-pharmacy-benefit.html if you want to read it in its entirety) that I had hinted that the FTC does not even need all the data the PBMs have yet to legally provide to the FTC in order to win litigation on the insulin therapeutic class of drugs. The reason is because there is already sufficient data in the public domain from the Senate Finance Committee, as well as from the University of Southern California, and now, the American Postal Workers Union Health Plan which practically guarantees the FTC has more than enough data to secure a victory for the Federal Trade Commission and potentially the U.S. Department of Justice. We still await the details when that lawsuit is filed. 

One reason the big, vertically-integrated (with the big commercial healthcare insurance companies) PBMs should be quite worried about the FTC litigation is that FTC can include any data derived from the public domain if it chooses to sue the big PBMs. And, with the insulin therapeutic class in particular, as I have noted previously, there is already a robust dataset within the public domain upon which the FTC (and/or the DOJ) can potentially cite in their litigation against the big PBMs.

The American Postal Workers Union Health Plan audit results also has potential to improve the odds of bipartisan legislation governing PBMs, although with a completely dysfunctional U.S. House of Representatives (which has had drama in naming and keeping a House Speaker in just two years it secured the narrowest majority in decades), I would not be willing to make any predictions. But the point is that PBMs don't really have many reliable friends in Congress these days from either political party.