Prime Aid V. Express Scripts: A Case of Greed or Contractual Liability?

Specialty pharmacy squares off with pharmacy benefit manager over contractual dispute.

In all disputes, there is always more than 1 side to every argument. This specifically applies to the recent Prime Aid V. Express Scripts lawsuit.

Prime Aid, the largest independent specialty pharmacy in New Jersey, is alleging that the powerful pharmacy benefit manager (PBM) Express Scripts removed the pharmacy from their network for pretextual reasons, for the sole purpose of directing clients to their own specialty pharmacy, Accredo. On the other hand, Express Scripts denies these claims, citing lack of adherence to the contract as the reason Prime Aid was removed.

Prime Aid had been contracting with the PBM since 2011, but was removed after the pharmacy failed to remove 7 claims for prescription drugs, and for paying a penalty to New Jersey to avoid disciplinary actions after a pharmacist improperly filled a prescription, according to Express Scripts.

The heart of this lawsuit is that the PBM owns its own mail-order pharmacy, a fact which Prime Aid’s attorney, Jonathan Swichar, believes is a driving factor of why the specialty pharmacy was removed from Express Scripts’ network. Swichar is an attorney for multiple pharmacies, some of which are facing similar issues with PBMs.

“We intend to establish that once independent pharmacies cross a certain level of revenue, they become a target of termination by Express Scripts based on the competition they pose to Express Scripts’ own pharmacies.” Swichar told The American Journal of Pharmacy Benefits in an interview. “Moreover, this is a consumer issue. In New Jersey, Prime Aid’s physical presence allowed it to provide personalized attention to specialty pharmacy patients. The patients receiving these medications require assistance in treatment compliance. Many suffer from severely compromised health conditions that cannot be adequately serviced by mail order.”

Swichar said that the reasons for termination in the Prime Aid case were pretextual, and should not have resulted in dismissal unless there were alternative motives involved. The specialty pharmacy’s attorney argues that this termination came soon after new, expensive hepatitis C virus (HCV) drugs came to the market that generated substantial revenue for Prime Aid.

“At that point, Express Scripts required that Prime Aid participate in a very extensive audit requiring the production of documents relating to approximately 30,000 prescriptions,” Swichar said. “Of the 30,000 prescriptions, Express Scripts said that they identified issues with 7 of them. All 7 related to 1 alleged issue, which was the failure to timely reverse a claim.”

This failure to reverse the claims in a timely manner was largely due to a delay in approval for patient co-pay assistance programs to obtain the HCV drugs, which resulted in the termination of their contract, Swichar said.

While Express Scripts could not comment directly on the pending litigation, a spokesperson did say that all pharmacies in their network are expected to adhere to their contracts to remain in good standing with the PBM, regardless of how perceivably small a contractual breech may be.

“If you think about why we are hired, it’s so clients can have a pharmacy network that we help design to fit their needs. It’s cost effective, it delivers quality care,” Express Scripts spokesperson Brian Henry told AJPB. “A big part of that is to ensure that the pharmacies that are in the network are who they say they are, and fulfill the contract agreement they have with us. What clients expect of us is to do that.”

Regardless of the size of the pharmacy, they are expected to comply with the contract both they and Express Scripts signed. If they do not, the PBM will attempt to rectify the situation, and the pharmacy will be removed if the issue is not resolved, Henry told AJPB.

However, Prime Aid feels their customers were taken away from them overnight with immaterial evidence. Swichar added that Prime Aid had not received reimbursement for the 7 prescriptions that were not reversed.

“Not only was the breach immaterial, but one that Express Scripts asserted required immediate termination,” Swichar said. “We intend to establish that the decision to immediately terminate was not driven by a few unavoidably-late reversals, but rather, the opportunity it presented to Express Scripts to steer a fairly significant number of Prime Aid’s patients to Express Scripts’ specialty pharmacy, Accredo, which is exactly what it did.”

Express Scripts denies these claims, and even conducted an analysis that revealed only 16% of Prime Aid customers were transferred to Accredo.

“It’s hard to believe that their claim is true at all, because if you look at the evidence, it clearly shows that when given the choice, people went to other pharmacies,” Henry said in the interview. “If the central argument is you’re kicking us out of your network because you want all of your members to go to Accredo, that didn’t happen.”

Since the removal of Prime Aid from the Express Scripts network, the pharmacy has lost a significant amount of their patients, had to lay off employees, and has had to alter their operations. The pharmacy is seeking to be reinstated, which is something that Express Scripts has done in the past for other pharmacies who have reconciled their reason for removal.

“The goal is to reach a result that requires that Express Scripts reinstate Prime Aid into the network and compensate it for whatever revenue it had lost during the period of time it was not in the network,” Swichar said. “The more general goal is to obtain a verdict that will send a message to PBMs that they cannot continue to exclude and terminate providers from their network when those providers have established an ability to adequately service patients.”

Despite Prime Aid’s allegations of stealing patients from terminating their contract on immaterial grounds, Express Scripts remains strong on the fact that it is the PBM’s job to enforce contracts, otherwise, why have one?

“Clients hire us to deliver a quality pharmacy network. That’s our job. Overwhelmingly, pharmacies are able to stay compliant. For those that don’t, we take action. We try to remediate, and if they can’t comply, then they are removed,” Henry said. “That’s the whole point of it. We’re proud of the relationships we have with tens of thousands of pharmacies. There’s never been more choice, and we make sure we have brought access to our members.”

Ultimately, the judicial system is left to answer whether Express Scripts removed Prime Aid from their network to gain their clients, or if the PBM is simply holding the specialty pharmacy accountable for not meeting the terms of their contract.