State sues pharmacy benefit managers for role in opioid crisis

OptumRX and ExpressScripts, together with CVS Caremark, hold more than 80 per cent of the Michigan pharmacy benefit market; Nessel entered a national settlement with CVS Caremark in 2023. 

“Pharmacies, manufacturers, and pharmacy benefit managers have reaped huge profits during the opioid epidemic, lining their pockets at the expense of Michiganders struggling with substance use disorder,” Nessel said. “I am committed to holding companies accountable for their role in this crisis and ensuring that the well-being of Michigan residents always takes precedence over corporate profits.”  

Nessel’s lawsuit alleges claims of Public Nuisance, Negligence, and under the Drug Dealer Liability Act against the pharmacy benefit managers (PBMs).  Specifically, the attorney general alleges the PBMs created common-law and statutory nuisance by allowing and promoting opioid use in Michigan and committed negligence in breaching their own contracts by failing to employ reasonable standards of care in the sale, delivery, and dispensing of opioids.  The attorney general further alleges that the PBMs participated in illegal marketing of a controlled substance and that the People of Michigan were injured by those who abused those substances, establishing a claim under the Drug Dealer Liability Act. 

A PBM is a third-party company that functions as an intermediary between insurance providers and pharmaceutical manufacturers, ostensibly to reduce the cost of prescription medication for its clients. It typically negotiates discounts and rebates with drug manufacturers, contracts with pharmacies, and develops and maintains drug formularies, or lists of covered drugs.  Because a PBM ultimately decides which drugs it covers, it can bargain for rebates from drug manufacturers who want to get their products on its formularies.  

PBMs have been largely unregulated for decades. In the absence of federal regulation, states have stepped up to protect consumers and pharmacies, though they have continued to face challenges from the PBM industry. In February of this year, 39 attorneys general, including Nessel, urged Congress (PDF) to take further actions to regulate PBMs at the federal level, and in June the Attorney General joined a bipartisan coalition of 32 attorneys general in asking the U.S. Supreme Court (PDF) to rule on states’ authority to regulate PBMs. 

Since taking office in 2019 Nessel has focused intently on combatting the opioid epidemic and holding accountable those responsible for creating and fueling the crisis, resulting in over $1.6 billion dollars to Michigan governments through settlements with McKinsey & Co, Distributors (Cardinal Health, McKesson, Inc., and AmerisourceBergen), Janssen Pharmaceuticals, Teva Pharmaceutical, Allergan Pharmaceutical, CVS, Walmart, and Walgreens. The money is distributed to the state and local units of government for Opioid-use disorder treatment and remediation.   

In March of this year, the attorney general launched a new website dedicated to the opioid settlement distributions. The website is intended to help residents and local units of government find multiple sources of information in one place, including an opioid settlement payment estimator, searchable by individual settlement, municipality, and year of receipt. 

According to the Michigan Department of Health and Human Services (MDHHS) between the years 2000 and 2020, the opioid death rate in Michigan increased on average 13.9 per cent each year. According to MDHHS, Michigan reported 2,998 overdose-related deaths in 2022. 

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