Spanberger Raises Concerns About Express Scripts Leveraging Exclusive Government Contract to Stifle Competition & Harm Servicemembers

Spanberger Joins More Than 20 Colleagues in a Bipartisan, Bicameral Effort Urging the Defense Health Agency to Increase Oversight of Its Exclusive Contract with Express Scripts

WASHINGTON, D.C. — U.S. Representative Abigail Spanberger joined a bipartisan group of more than 20 U.S. House and U.S. Senate colleagues in raising concerns over Express Scripts’ exclusive contract to administer pharmacy benefits to active duty servicemembers and Veterans.

Express Scripts — owned by Cigna — is the second largest pharmacy benefit manager (PBM) in the country, which also owns its own mail-order pharmacy, Accredo. Express Scripts routinely leverages its exclusive contract with the Defense Health Agency (DHA) as the sole pharmacy benefit manager for TRICARE — the uniformed services healthcare program for servicemembers, Veterans, and their dependents — to keep much of its business in-house, steering TRICARE members to Accredo while disadvantaging competitors, including rural, independent pharmacies that servicemembers and their families rely on. According to a Wall Street Journal investigation, Express Scripts charged commercial insurers more than 27 times more for a selection of generic specialty drugs at Accredo compared to Cost Plus Drugs, an independent pharmacy the Wall Street Journal used as a baseline. In August 2022, Express Scripts offered pharmacies that compete with Accredo such usurious contract terms that nearly 15,000 pharmacies left the TRICARE network, forcing 400,000 active duty and retired military families to decide between searching for a new in-network pharmacy or simply opting into Accredo’s mail-order option.

In a letter to Assistant Secretary of Defense for Health Affairs Dr. Lester Martinez-Lopez and DHA Director Lieutenant General Telita Crosland, Spanberger and her colleagues — following DHA’s decision to continue its exclusive contract with Express Scripts — underscore the well-documented harms of this contact on competing pharmacies and TRICARE beneficiaries, particularly those with complex medical conditions who are ill-served by mail-order pharmacies. Additionally, the lawmakers expressed concerns over Express Scripts leveraging its exclusive contract to overcharge taxpayers, as vertically integrated PBMs routinely markup drug prices to pad their bottom lines. The lawmakers urged the Administration to increase its oversight of the service Express Scripts is providing to servicemembers, Veterans, and their families.

“Since the DHA granted Express Scripts its exclusive TRICARE contract in 2009, the company has consistently leveraged its market power to squeeze independent pharmacies and steer TRICARE beneficiaries to their own mail-order pharmacy, and used other tactics to increase costs for service members and taxpayers,” wrote Spanberger and her colleagues. “As a PBM, Express Scripts sets reimbursement rates at pharmacies and bills insurers when its enrollees fill their prescriptions. However, because Cigna also owns Accredo, it can effectively keep much of its business inhouse, using its PBM to steer patients to its own pharmacy while disadvantaging competitors. For example, Express Scripts appears to routinely under-reimburses pharmacies at cancer clinics for expensive cancer drugs. When pharmacies reject Express Scripts’ predatory terms, patients are forced to use Accredo’s mail-order pharmacy, which is prone to delays and safety issues, but drives more profits to parent company Cigna. This anti-competitive gaming is particularly evident in TRICARE.”

Their letter continued, “In a House oversight hearing in September 2023, President of the National Community Pharmacists Association Hugh Chancy described the harms of Express Scripts’ steering practices on one patient: ‘She is blind and we hand-deliver her medications to her home in specialty packaging. With Tricare’s changes, she was forced to go to the mail order without the specialty packaging and her elderly husband…must drive 40 miles round trip to the pharmacy.’ We believe DHA’s exclusive contract with Express Scripts may be harming TRICARE beneficiaries, independent pharmacies, and American taxpayers.”

Click here to read the letter, and the full letter text is below.

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Dear Assistant Secretary Martinez-Lopez and Lieutenant General Crosland,

We write to express our concerns with the Department of Health Agency’s (DHA’s) decision to continue its exclusive contract with Cigna-owned Express Scripts – the second largest pharmacy benefit manager (PBM) in the country – to administer TRICARE’s pharmacy program, which serves 9.6 million beneficiaries. Since the DHA granted Express Scripts its exclusive TRICARE contract in 2009, the company has consistently leveraged its market power to squeeze independent pharmacies and steer TRICARE beneficiaries to their own mail-order pharmacy, and used other tactics to increase costs for service members and taxpayers.

Cigna purchased Express Scripts for $67 billion in 2018, combining its health insurance business with the PBM and its giant mail-order pharmacy, Accredo. As a PBM, Express Scripts sets reimbursement rates at pharmacies and bills insurers when its enrollees fill their prescriptions. However, because Cigna also owns Accredo, it can effectively keep much of its business inhouse, using its PBM to steer patients to its own pharmacy while disadvantaging competitors. For example, Express Scripts appears to routinely under-reimburses pharmacies at cancer clinics for expensive cancer drugs. When pharmacies reject Express Scripts’ predatory terms, patients are forced to use Accredo’s mail-order pharmacy, which is prone to delays and safety issues, but drives more profits to parent company Cigna.

This anti-competitive gaming is particularly evident in TRICARE. In August 2022, Express Scripts offered pharmacies that compete with Accredo such usurious contract terms that nearly 15,000 pharmacies left the TRICARE network, forcing 400,000 active-duty and retired military families to decide between searching for a new in-network pharmacy or simply opting into Accredo’s mail-order option. According to one expert familiar with the situation “The Defense Department is allowing contractors to hold up pharmacies to say, ‘Either you accept a money losing contract or take the blame for not serving veterans.’”

Following overwhelming public pressure from lawmakers and the public, Express Scripts reopened its pharmacy network in late 2022. However, the terms of the contract remained extortionate, “result[ing] in significant losses for nearly every prescription filled.” As a result, fewer than 5,000 pharmacies rejoined, leaving a total of roughly 10,000 pharmacies that were now out of TRICARE’s network. Indeed, this exodus of independent and retail pharmacies can be catastrophic for TRICARE beneficiaries, especially those with complex medical conditions who are ill-served by mail-order pharmacies. For example, in a House oversight hearing in September 2023, President of the National Community Pharmacists Association Hugh Chancy described the harms of Express Scripts’ steering practices on one patient: “She is blind and we hand-deliver her medications to her home in specialty packaging. With Tricare’s changes, she was forced to go to the mail order without the specialty packaging and her elderly husband…must drive 40 miles round trip to the pharmacy.”

In addition to inflicting well-documented harms on competing pharmacies and TRICARE beneficiaries, Express Scripts may also be using its TRICARE contract to overcharge taxpayers. Last year, a Wall Street Journal investigation found that Express Scripts charged commercial insurers 27.4 times more for a selection of generic drugs at Accredo compared to Cost Plus, an independent pharmacy that the Wall Street Journal used as a baseline. Similarly, in West Virginia, where Express Scripts manages the pharmacy benefit for West Virginia’s public employees, the PBM charged insurers 100 times more for a selection of expensive specialty drugs at Accredo than it charged for those same drugs at competing pharmacies. And in Massachusetts in 2022, Express Scripts agreed to pay the state $3.2 million after allegedly overcharging the workers’ compensation insurance system. We are concerned that Express Scripts may be employing these same tactics to overcharge TRICARE – a taxpayer-funded program – for drugs dispensed at Accredo, leveraging its TRICARE contract to underpay competitors and overpay its related companies.

For these reasons, we believe DHA’s exclusive contract with Express Scripts may be harming TRICARE beneficiaries, independent pharmacies, and American taxpayers. Under DHA’s TPharm5 contract – which details TRICARE’s “firm-fixed-price, incentive/award fee contract” with Express Scripts – the agency may elect to revise terms or exit the exclusive agreement with Express Scripts each year until the contract period ends in December 2029. As such, to better understand DHA’s oversight of Express Scripts, as well as the likelihood that the agency continues its TPharm5 contract until its conclusion, we respectfully request answers to the following questions by no later than July 2, 2024.

1. How does DHA verify that Express Scripts is following all of the network adequacy requirements of TPharm5, including the requirement that there is at least one pharmacy within 15 minutes driving time of 90 percent of TRICARE beneficiaries?
   1. Please include a copy of the findings of any audits of this requirements.
   2. Please list any violations of the network terms since 2009.
2. How many pharmacies are in TRICARE’s network today?
   1. Please list the number of in-network pharmacies for each year since 2009 disaggregated by retail and independent pharmacies.
3. Express Scripts has been found to deny coverage of expensive specialty drugs, resulting in care denials and burdensome appeals processes for TRICARE beneficiaries. How does DHA track these denials?
4. Has TRICARE conducted any pricing reviews to determine if Express Scripts is charging more for drugs through Accredo than it charges for these drugs at independent pharmacies?
   1. If so, what did these reviews find?
5. How much does Express Scripts charge per prescription for each of the ten most frequently prescribed products when they are for purchases through Accredo? How much does it charge for these same prescriptions when they are purchased through independent pharmacies? Please list prices for each drug individually.

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