CASE BACKGROUND
Pharmacy benefit managers (PBMs) are companies that function as intermediaries between pharmacies and insurers and health plans (Third Party Payers or TPPs). PBMs contract with TPPs to negotiate discounted prices with pharmacies. The pharmacies gain access to the TPPs’ large customer bases in exchange for accepting the discounted prices -- an arrangement that only works if the pharmacies can still run a profitable business with the discounted prices. Increasingly, independent pharmacies such as the plaintiffs and class members cannot meet this threshold.
As PBMs take an ever-larger share of America’s healthcare dollars, independent pharmacies and the communities they serve suffer. Between 2013 and 2022, about 10% of independent retail pharmacies in rural America closed. This affected small business owners, their employees, and their patients. In some rural and medically underserved areas, local community pharmacies are the main healthcare option for Americans, who depend on them for lifesaving medication.
A successful PBM must build a large network of pharmacies in order to attract TPPs whose customers benefit from access to a wide array of pharmacies. It must also assemble a large network of TPPs on the other side to be able to negotiate lower reimbursements to the pharmacies who benefit from access to a large number of customers.
In a normally functioning competitive market, PBMs would compete against each other to attract pharmacies to their network by offering competitive reimbursements for the medications. But since at least January 1, 2024, GoodRx and PBM defendants have agreed not to compete for pharmacies’ business. Instead, they are sharing their confidential reimbursement information with each other and agreeing to pay pharmacies the lowest reimbursement rate. This has enabled them to suppress payments to independent pharmacies and keep more for themselves. And because the PBM defendants control nearly two-thirds of the market for prescription transactions, the pharmacies have no choice but to accept their anticompetitive pricing.
GoodRx facilitates defendants’ unlawful horizontal sharing of confidential, proprietary reimbursement information through a scheme called the “Integrated Savings Program” (ISP), in which GoodRx collects confidential reimbursement pricing for generic drugs from each of the PBM defendants and shares it among them, enabling them to select the lowest reimbursement rate. And because each of the PBM defendants has access to all of the PBM defendants’ reimbursement information, the cabal can discipline any co-conspirator that tries to gain market share by cheating on the scheme.
By agreeing to share their information with GoodRx and the other PBM defendants through GoodRx’s ISP, defendants can and do suppress reimbursements to plaintiffs and class members. This unlawful scheme imposes a particularly heavy cost on independent pharmacies, which are folding at the rate of one a day nationwide.
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