It’s not all good news for GoodRx.
The drug discount company is facing at least three separate class-action lawsuits from independent pharmacies accusing it of “conspiring” with pharmacy benefit managers (PBMs) to fix reimbursement rates in a way that boosts the PBMs’ profits. Also named in two of the three suits are four PBMs: Caremark, Express Scripts (owned by Cigna), Medimpact Healthcare Systems, and Navitus Health Solutions.
PBMs are companies that negotiate between drugmakers, insurers, and pharmacies to decide which drugs insurers cover and how much pharmacies are reimbursed for dispensing those drugs.
The lawsuits come as PBMs face increasing scrutiny, with the Federal Trade Commission bringing a lawsuit against the country’s top three PBMs in September for allegedly boosting profits by inflating the price of insulin.
What’s the issue?
The crux of the class-action lawsuits—filed in late October and early November—relates to a new line of business GoodRx started in 2023 called the “integrated savings program” that deals with generic drugs, which make up about 90% of drugs dispensed in pharmacies in the US.
Under the program, the independent pharmacies serving as plaintiffs allege that GoodRx has formed partnerships with certain PBMs in which the PBMs pay GoodRx to use its database of proprietary pricing data to lower the amount PBMs pay in reimbursement fees to dispensing pharmacies.
The program involves drug discount cards, which consumers can receive from PBMs to get cheaper prices on specific drugs at partner pharmacies. In 2021, discount cards made up 5.4% of all prescription drug transactions, according to data from the Association for Accessible Medicines.
As an example, let’s say Caremark, one of the top three PBMs in the US, gives a consumer a drug discount card for the diabetes drug metformin.
Without the GoodRx program, after a customer picks up their metformin prescription from the pharmacy, the pharmacy submits a claim for reimbursement to Caremark. Then Caremark reimburses the pharmacy a previously agreed-upon amount—say, $10—and the transaction is complete.
But GoodRx’s integrated savings program allegedly introduced a new step to the process, Miranda Rochol, SVP of provider solutions at health tech company Prescryptive Health, told Healthcare Brew. Prescryptive operates in the pharmacy benefits space and advocates for increased transparency among PBMs.
So, in our example, Caremark forwards the claim to GoodRx, which checks its database to see if any other PBMs have agreements to pay the pharmacy a lower amount for that drug. If the GoodRx database says another PBM reimburses $8 for metformin, then Caremark can also reimburse just $8, even if it previously negotiated to pay the pharmacy $10.
But that’s not all, Rochol added. GoodRx also allegedly charges the pharmacy a transaction fee—which is usually between $5 and $10, according to the lawsuits—that it splits between the other PBMs it compared its prices with, further lowering the amount of money the pharmacy gets paid, Rochol said.
Navigate the healthcare industry
Healthcare Brew covers pharmaceutical developments, health startups, the latest tech, and how it impacts hospitals and providers to keep administrators and providers informed.
“These partnerships amount to price-fixing agreements that enable the PBMs to allocate discount card transactions amongst one another in real time, ensuring the PBMs pay the lowest possible reimbursement rates to pharmacies on every transaction,” according to one of the lawsuits filed by Old Baltimore Pike Apothecary and Smith’s Pharmacy in the US District Court for the District of Rhode Island on November 1. “By targeting generic drugs, [the] defendants are attacking a stream of revenue on which independent pharmacies depend for most of their survival.”
Another lawsuit, filed by Keaveny Drug, Inc. in the US District Court for the Central District Of California Western Division on October 30, claims that thanks to the GoodRx program, the PBMs listed in the suit could end up underpaying pharmacies about $35 million just in 2024. The third lawsuit was filed in the same California court on November 1 by Community Care Pharmacy.
All three lawsuits allege that the integrated savings program favors chain pharmacies that are affiliated with PBMs, such as CVS, which owns Caremark. They also allege the arrangement violates the Sherman Antitrust Act, a federal law that prohibits practices that stifle competition.
“The premise of these lawsuits is categorically false,” Express Scripts spokesperson Justine Sessions said in a statement sent to Healthcare Brew. “Our partnership with GoodRx helps promote lower prices for patients at the pharmacy counter by directly integrating discount card pricing with customers’ pharmacy benefits. This program is an important part of our work to protect people from high drug costs, particularly for those with high deductible plans.”
Caremark spokesperson Michael DeAngelis told Healthcare Brew that the PBM “generally reimburses independent pharmacies at higher levels than chain drugstores, including CVS pharmacies. Our Caremark Cost Saver program also helps lower out-of-pocket drug costs for our clients’ members. These lawsuits are entirely without merit, and we will vigorously defend against them.”
Neither GoodRx nor the other PBMs named in this story responded to Healthcare Brew’s requests for comment.
The bigger picture
Independent pharmacies are already struggling to keep their doors open.
The National Community Pharmacists Association (NCPA) said in March that nearly one-third of the country’s roughly 19,000 independent pharmacies are in danger of going out of business. And in 2023, about one independent pharmacy closed per day in the US, according to the NCPA.