Bernstein Litowitz Berger & Grossmann Announces Filing of Racketeering Class Action Against Express Scripts

Nation’s largest Pharmacy Benefits Manager accused of gaming its drug formulary and withholding billions in rebates from PBM customers.

NEW YORK–(BUSINESS WIRE)–Today, Bernstein Litowitz Berger & Grossmann LLP (BLB&G) announces the filing of a class action against Express Scripts – the nation’s largest Pharmacy Benefits Manager (PBM) – and its parent companies, Cigna and Evernorth. BLB&G filed this action on behalf of the Plumbers’ Welfare Fund, which provides healthcare benefits for members of Chicago-based Plumbers Local 130. Local 130 has long been a leader in advocating for labor rights and expanding healthcare access for union members and their families.

The class action, brought on behalf of Express Scripts’ PBM customers, arises from a wide-ranging fraudulent conspiracy through which defendants diverted billions of dollars in drug rebates from their PBM customers to an offshore entity to enrich themselves. Through this scheme, Express Scripts breached its duty to develop and manage a drug formulary – the list of drugs readily available to its PBM customers – to maximize cost efficiency and efficacy for its customers.

Here is a link to the court filing: https://static.blbglaw.com/docs/ESI%20Complaint_file-stamped%202.17.26.pdf.

Nationally recognized labor leader James F. Coyne, the Business Manager of Plumbers Local 130 and Co-Chairman of the Plumbers’ Welfare Fund, stated that “For far too long, America’s working men and women who rely on our corporate healthcare system have been grossly overcharged, and denied access to affordable care. A major corporation like Express Scripts, that takes kickbacks from drug companies rather than protecting the interests of its clients, needs to be held accountable.”

This fraudulent scheme directly contravened Defendants’ numerous promises to lower healthcare costs. Express Scripts told its clients that it “exists to lower the cost of medications” and that “Express Scripts negotiates with drug companies to lower the cost of medications included on our clients’ formularies.” Express Scripts further represented to its customers that it would select drugs for the formulary based on cost and effectiveness.

Express Scripts breached these promises by demanding kickbacks from drug manufacturers in exchange for beneficial placement of certain drugs on its formulary, and excluding lower cost competitor drugs. In essence, Express Scripts sold drug manufacturers access to its formularies, which dictate the drugs available to Express Scripts’ PBM customers. Rather than extracting kickbacks in exchange for formulary access, Express Scripts should have negotiated with drug companies to maximize rebates for its PBM clients. Defendants’ misconduct caused significant harm to the Plumbers’ Welfare Fund and the thousands of other PBM clients that counted on Express Scripts to lower their prescription drug costs.

Because Express Scripts’ contract with PBM clients says that some or all money that Express Scripts receives from drug companies must be paid to customers as rebates, Express Scripts did not want to receive kickbacks directly from the drug companies. In order to hide those kickbacks, Express Scripts created Ascent, an offshore vehicle in Switzerland to receive those monies from drug companies.

Through Ascent, Express Scripts obtained billions of dollars in kickbacks, falsely characterizing them as “fees.” According to a former Express Scripts and Cigna executive cited in the complaint, “there are lots of different fees you can charge” through Ascent: “You can charge data fees. You can charge administrative. You can charge clinical fees” which enabled Defendants to “double, triple dip on fees.” Extracting kickbacks from drug companies rather than maximizing rebates directly contradicted Defendants’ promise that “Rebates are not secret or hidden payments.”

By funneling kickbacks to Ascent, Defendants side-stepped provisions in PBM customer contracts requiring that money Express Scripts received from drug companies constituted rebates that must be shared with its customers.

Avi Josefson, a senior partner at BLB&G, said, “This is simply the latest example of healthcare companies abusing a highly complex, intentionally opaque system to take advantage of their customers. This kind of misconduct increases costs and limits access for millions of Americans and can no longer be tolerated.”

ABOUT BLB&G
Bernstein Litowitz Berger & Grossmann LLP prosecutes class and private actions on behalf of individual and institutional clients worldwide. Since its founding in 1983, the firm has recovered more than $40 billion in cases ranging from securities fraud to healthcare fraud to racial discrimination. BLB&G is widely recognized as a preeminent litigation firm with a deep commitment to holding corporations responsible for their misconduct.

Contacts

Avi Josefson [e-mail]
Peter Russell [e-mail]