AG Lopez sues major pharmacy benefit managers to protect Hawai‘i consumers

Attorney General Anne Lopez today filed a lawsuit on behalf of the State of Hawaiʻi seeking civil penalties, damages, disgorgement of profits, and injunctive relief against “the Big Three” pharmacy benefit managers – CVS Caremark, Express Scripts, and OptumRx – which, collectively, manage prescription drug benefits for hundreds of thousands of Hawaiʻi residents.

The complaint alleges that the pharmacy benefit managers’ business practices have driven skyrocketing prices for brand-name prescription medications over the past decade. These practices include charging drug manufacturers “rebates,” which are payable directly to the pharmacy benefit managers, in exchange for the favorable placement of drugs on the pharmacy benefit managers’ formularies – a ranked list of prescription medications covered by insurance.

If a manufacturer refuses to increase the rebate it pays to the pharmacy benefit managers, the manufacturer risks its medication being excluded from the pharmacy benefit managers’ formularies entirely – severely impacting the medication’s chance of success and forcing consumers to choose between paying the medication’s full cash price out-of-pocket or switching to a different drug.

The number of medications excluded from the pharmacy benefit manager defendants’ formularies increased by 961% from 2014 to 2022. Most frequently excluded were medications used to treat chronic conditions, meaning that patients with chronic illnesses were disproportionately affected.

In addition to rebates, pharmacy benefit managers charge manufacturers administrative fees, data fees, and price-protection fees, none of which actually provide a discount to consumers at the point of sale.

The complaint alleges that the pharmacy benefit manager defendants engaged in unfair methods of competition and unfair and deceptive acts and practices in violation of Hawaiʻi law. The state seeks damages, civil penalties of up to $10,000 per violation and additional civil penalties of up to $10,000 for each deceptive or unfair act that was directed towards an elder, punitive damages, and disgorgement of profits. The state also seeks an injunction requiring the pharmacy benefit manager defendants to halt their unfair and deceptive practices.

The state is being represented by Deputy Attorneys General Ciara Kahahane and Erin Lau; the Honolulu law firm of Cronin, Fried, Sekiya, Kekina & Fairbanks; and the national law firm Motley Rice LLC.