Baltimore’s mayor and city council have sued Biogen, alleging that the Boston-based drug developer worked with pharmacy benefit managers to suppress generic versions of a popular multiple sclerosis drug.
The lawsuit, filed in federal court in Illinois on Sept. 20, disputes a core argument that the PBM industry has tried to sell: that the rebates it negotiates with drugmakers eventually cut costs for clients.
The city contends that what Biogen described as “rebates” or “fees” to the PBMs were in fact kickbacks for hampering generic versions on formularies. According to the lawsuit’s claims, the rebates Biogen paid were about 19% off Tecfidera’s list price of $90,000 a year, while generic versions were more than 90% discounted.
The city alleges that Biogen’s goal was to make lower-cost generics less appealing, and to help boost the company’s newer multiple sclerosis drug, Vumerity, which launched in the fourth quarter of 2019. The lawsuit says that Biogen’s suppression strategy was implemented in part because the Covid-19 pandemic wiped out in-person sales meetings, making it more difficult to convince doctors to switch patients from Tecfidera onto Vumerity.
“Biogen denied to purchasers the massive cost savings that would and should have resulted from unimpaired generic competition,” according to the complaint.
Biogen declined to comment on the lawsuit. Neither the city of Baltimore nor the lawyers representing it responded to a request for comment. The three largest PBMs — CVS Caremark, Express Scripts and Optum Rx — weren’t included as defendants in the lawsuit, but are listed as co-conspirators. Those companies also didn’t immediately respond to a request for comment on Wednesday.
The lawsuit was filed as a class action complaint, and it’s unclear if other municipalities or employers will follow along.
While drug developers have worked to paint PBMs as the source of high prescription drug prices in the US, the two industries work closely together to negotiate prices on almost every drug the companies sell. PBMs have likewise argued that pharma companies are the ones that set prices, and that they win discounts for insured consumers.
The Federal Trade Commission sued the three largest PBMs this week, arguing that their demand for higher rebates — and by association, manufacturers’ higher list prices — were manipulating the market for insulin. The industry has come under bipartisan scrutiny in Congress, but there has been little progress on legislation to further regulate its business practices.