Express Scripts Appeals Case Over Louisiana Pharmacy Fee

Pharmacy benefits manager Express Scripts was granted permission to appeal the lawsuit between themselves and Louisiana Independent Pharmacies Association, an organization that helps to protect the interests of smaller pharmacies throughout the state.

The lawsuit, originally filed on May 21, 2020 in the Western District of Louisiana, stems from a dispute between the two entities surrounding a law that requires pharmacies to pay $0.10 per outpatient prescription to the Louisiana Department of Health (LDH). Under the law, the pharmacy is responsible for paying this fee regardless of coverage and must be reimbursed by the health care provider or third party manager, including patients with Medicaid. These fees generate millions of dollars in funding for Louisiana’s Medicaid program.

Since its inception in 1992, there have been some controversies in regards to defining the rule of this law. The law asserts that “It is the obligation of a health insurance issuer or its agent to reimburse a pharmacist or his agent for fees remitted by a pharmacy or pharmacist or his agent.” In 2016, the Louisiana Department of Insurance (LDI) issued an advisory letter stating that they did not believe health insurance issuers and any other provider or 3rd party company providing Medicare advantage plans were subject to imposition of the ten cent provider fee. 

The LDH released a response letter that September in an attempt to clarify the controversy, saying that “all prescriptions regardless of payor source are subject to imposition of the ten cent provider fee. Based on the letter from the LDI, certain plan administrators began to refuse to  reimburse the fee or attempted recouping prior payments of it. This put the plaintiff in an awkward and potentially expensive situation. They were still subject to these fees under the clarification provided by the LDH but were not provided with reimbursements based on the declaration of the LDI. 

The plaintiff stated that this assertion made by the LDI is in violation of this law, which decrees that all fees must be “uniform” and “broad-based”. This means that the fee should be applied to all members of the relevant class, irrespective of insurer, plan, or administrator. The LDH also reaffirmed this aspect of the law in March 2018 via another advisory letter, stating that the 2016 notice was meant to notify the industry that LDI did not have authority in that matter and that  “Effective   immediately,   all   health   insurance   issuers,   health   maintenance organizations, third party administrators, group self-insurers, and any other affected persons are ordered and directed to comply with all applicable state and federal laws pertaining to the provider”. The LDI and LDH also agreed  to  a  Consent  Judgment  in  state  court,  stating  that  there was  no  conflict between the two state agencies’ positions. 

The LDI later released a statement in May 2020 saying that they thought that federal law preempted this state law, but also left a disclaimer that they neither endorse or express non-agreement with the fee, therefore taking a neutral stance on the subject. At this point, the defendant had no citable source that could back up their denial to reimburse. Despite the clarification, the plaintiff claims that Express Scripts has failed to provide the $0.10 fee required by law. The plaintiff requests a ruling from the court on whether the prescription fee is due on all prescriptions regardless of payor and whether or not Express Scripts is required to reimburse the pharmacies for this fee.

The plaintiff is represented by Whaley Law Firm. The defendant is represented by Sher Garner and McDermott Will & Emery.