Prescription drugs are seen on shelves at a pharmacy in Montreal, March 11, 2021.Ryan Remiorz/The Canadian Press
The Competition Bureau has requested information from Express Scripts Canada, one of the largest processors of insurance claims at pharmacy checkouts, about how much it is receiving in rebates from drug manufacturers, according to court filings.
Investigators received a court order last month to probe Express Scripts on allegations that it is steering patients to particular pharmacies while also charging those pharmacies inappropriate fees.
Express Scripts is a subsidiary of U.S.-based Express Scripts Holding Co., owned by insurance giant Cigna Corp. It is the one of two dominant “pharmacy benefit managers,” or PBMs, in Canada, which process electronic insurance claims when a patient buys medication from a drug store. Express Scripts also operates four mail-order pharmacies.
The bureau’s application to Federal Court, which The Globe and Mail obtained from the courthouse, specifies the information it is seeking from Express Scripts, including a request for interviews with four executives.
Among the data the bureau is seeking is information about what rebates Express Scripts received from drug manufacturers, drug wholesalers or pharmacies as part of its business arrangements. The application says rebates could take a variety of forms, such as volume discounts, credits, administrative fees or formulary placement fees.
The bureau argued that it needs information about rebates because Express Scripts plays a crucial role in the drug-buying ecosystem, as it sits in a nexus between pharmacies, insurers and drug makers. For example, the rebates could “play a role in the selection of pharmacies” that are part of preferred pharmacy networks (PPNs), which steer patients to particular dispensaries.
The bureau says it also needs the information to determine whether Express Scripts “is leveraging its PBM position to obtain better terms” from manufacturers because it also operates its own pharmacies.
The court documents contain correspondence between the Competition Bureau and Express Scripts’ lawyers at McMillan LLP about the scope of the order. In letters, Express Scripts’ lawyers push back strongly on the need to disclose rebate information.
“To clarify, ESC does not negotiate with pharmacies for Rebates or receive any Rebates from pharmacies,” McMillan partner Mark Opashinov wrote in a letter.
However, an affidavit from Competition Bureau officer David Harding indicated that the bureau already had copies of some deals between Express Scripts and pharmacies that included rebates. “We have some such agreements in our possession,” the affidavit said.
Express Scripts did not respond to requests for comment.
The Competition Bureau has said that it has not made a conclusion of wrongdoing at this time.
The court application also discloses that the Competition Bureau asked Express Scripts to provide a waiver to the Federal Trade Commission in the U.S. to allow the FTC to “share confidential information with the bureau in connection with its ongoing investigation into similar matters involving the parent legal entity of ESC.” The document says Express Scripts had not responded to the waiver request.
In 2022, the FTC launched an inquiry into PBMs, which is continuing. An FTC report last July found that pharmacies affiliated with the three largest PBMs in the U.S. – one of which is Express Scripts – received 68 per cent of the dispensing revenue related to specialty drugs in 2023, a number that has grown in recent years.
The FTC filed a complaint in the fall that argued PBMs had used their control of insurance formularies to extract lucrative kickbacks. For example, it blamed those companies for helping drive up the price of an insulin drug by more than 1,200 per cent over an 18-year period.
Michael Law, a Canada Research Chair in access to medicines at the University of British Columbia, said the court application reveals just how tangled the flow of payments is between players in the pharmaceutical world, much of which escapes public scrutiny.
“We already have a lot of confidential money flows in the world of prescription drugs,” he said.
He said it also shows the potential concerns that can come up when you have a space dominated by only a handful of key players.
“If they start leveraging that in ways that restrict choice of pharmacy or result in higher fees if you go to an out-of-network pharmacy or something like that, that’s going to affect what folks end up paying when they end up filling a prescription if they’re on a private plan,” he said.
With reports from Susan Krashinsky Robertson