A federal judge has tossed a lawsuit against the three largest pharmacy benefit managers, pouring cold water on the state of Hawaii’s claim that the companies unlawfully inflate drug prices.
Friday’s decision from the Federal District Court of Hawaii sided with the companies’ January motion that the state failed to specifically identify deceptive or unfair behavior, and that the companies ultimately weren’t to blame for financial injuries to state residents.
The case against CVS Caremark (a unit of CVS Health), Express Scripts (a unit of Cigna) and Optum Rx (a unit of UnitedHealth Group) was dismissed without prejudice, giving the state 45 days to amend its complaint.
Judge Leslie Kobayashi’s decision throws a wrench into the state’s claim that the rebates PBMs charge drug manufacturers are akin to a pay-to-play scheme that limits drug access and increases costs. Hawaii Attorney General Anne Lopez had argued when the complaint was first filed in October 2023 that drugs left off PBM formularies disproportionately impacted patients with chronic conditions.
In January, lawyers representing the PBMs filed a motion to dismiss, saying in part that because PBMs don’t engage directly with consumers, they couldn’t possibly violate Hawaii’s Unfair or Deceptive Acts or Practices law.
Lawyers for the companies argued that since the PBMs negotiate drug rebates on behalf of insurers, including government coverage programs like Tricare, then any argument about price gouging would implicate the state.
The state has since asked the judge to allow them to file an unredacted version of the first complaint under seal. If the judge denies the request, then attorneys representing the AG’s office have asked for the go-ahead to publicly file an unredacted complaint. A spokesperson for the attorney general said in an email the department awaits a written decision “to determine the next course of action.”
The ruling is a win for the PBM industry, after the Federal Trade Commission last week issued a scathing report against the middlemen. The agency argued that the industry has significant sway in steering drugs toward their own, in-network pharmacies, with implications on cost and access.
But the regulator proposed no action to limit the PBMs’ practices.
States, however, have gone after the industry on their own. In addition to several lawsuits, a majority of state attorneys general signed onto an amicus brief last month supporting Oklahoma’s case before the Supreme Court to regulate PBMs themselves. The industry has opposed such a move.