Dive Brief:
- A group of independent pharmacies in Arkansas are suing Express Scripts, one of the largest pharmaceutical middlemen in the U.S., for allegedly underpaying for tens of thousands of prescriptions.
- The lawsuit filed Tuesday, which seeks hundreds of millions of dollars in damages, is the first filed under a state law passed last year giving Arkansas pharmacies the ability to go after PBMs for reimbursing them below the acquisition cost of drugs, according to lawyers for the plaintiffs.
- “We’re committed to reimbursing pharmacies at competitive rates and will defend ourselves against these allegations,” an Express Scripts spokesperson said.
Dive Insight:
Under Arkansas law, PBMs aren’t allowed to reimburse pharmacies less than their cost of acquiring a drug, measured by a metric called the National Average Drug Acquisition Cost, or NADAC.
NADAC is maintained by the federal government, and easily accessible by PBMs like Express Scripts — as are details like drug cost, quantity and fill date, everything the middlemen need to apply proper pricing when a drug is dispensed, according to the complaint filed Tuesday in Missouri circuit court.
But Express Scripts still reimburses pharmacies well below the NADAC, the lawsuit alleges, forcing them to absorb the revenue shortfalls or invest valuable time and resources to appeal improper payments.
The 12 plaintiff pharmacies pointed to recurring patterns across drugs, plans and dates to argue the underpayments are the purposeful result of the system Express Scripts uses to adjudicate claims, instead of one-off mistakes.
“Express Scripts’ failure to comply with Arkansas law is not a technological challenge; it is a business decision,” the complaint reads. “Express Scripts repeatedly chose to violate Arkansas law.”
Amid complaints from pharmacies about chronic underpayments, Arkansas stepped up enforcement: issuing bulletins in 2021 clarifying the rules and seeking per-prescription penalties from violators — including Express Scripts — in 2024.
And last year, Arkansas’ legislature passed a law giving pharmacies the authority to file civil lawsuits against PBMs for violating the state’s maximum allowable cost and reimbursement laws. It’s is a powerful enforcement tool that can yield statutory damages of up to $10,000 for each violation, among other remedies.
The law took effect last summer. But since then, Express Scripts has paid the 12 plaintiff pharmacies below NADAC tens of thousands of times, according to the complaint.
Specifically, the pharmacies estimate that Express Scripts underpaid roughly 48,300 prescriptions between August 2025 and the end of March 2026.
They stressed that this is likely a conservative estimate given they don’t have complete visibility into adjudication data, and are seeking a trial to determine the scope of underpayments and the damages they’re owed.
“Whether a given shortfall is a few cents or many dollars, the statutory command is the same. And, repeated thousands of times, the shortfalls become a recurring withdrawal from the pharmacy’s operating account: the cash needed to buy insulin, antibiotics, anticoagulants, seizure medications, cancer drugs, and the next patient’s prescription,” the complaint reads.
PBMs are influential middlemen that sit at the nexus of the U.S. prescription drug supply chain, determining which drugs sit on insurers’ formularies, negotating savings with manufacturers and reimbursing pharmacies for dispensing the medications to their members.
There are about 70 PBMs currently operating in the U.S. But the market is highly consolidated, with just three companies — Cigna’s Express Scripts, CVS’ Caremark and UnitedHealth’s Optum Rx — controlling 80% of all American prescriptions.
That market power is a growing concern, given the companies live within massive conglomerates that also operate specialty pharmacies and other dispensors that compete directly with independent pharmacies for the same revenue. According to research from the Federal Trade Commission, the so-called “Big Three” prefer their affiliated pharmacies, giving them favorable rates and strong-arming competitors into disadventageous contracts.
The PBMs deny that’s the case. Still, amid a lack of comprehensive federal guardrails, states have increasingly stepped up to regulate PBMs’ behavior, including by shielding local independent pharmacies.
Arkansas has been particularly aggressive, passing a law last year forbidding PBMs from owning pharmacies in the state. The legislation — the first of its kind — has been challenged by PBMs, including Express Scripts, in court, and a judge halted it last summer.
