In May 2023, AbbVie, a pharmaceutical manufacturing company, filed suit against Payer Matrix, a company that provides alternate funding options for their clients, usually health plans, by way of enrolling participants in the health plan into programs aimed at providing expensive specialty medication for low income and uninsured participants. After realizing Payer Matrix’s business model, AbbVie filed suit against Payer Matrix and alleged that Payer Matrix violated, and continues to violate, Illinois state law on various grounds including fraud and deceptive consumer practices. While the case is still in its primitive stages, this blog summarizes the issues that have been presented in AbbVie’s complaint and Payer Matrix’s response, a motion to dismiss.
AbbVie manufactures specialty medications, such as Humaria and Skyrizi, which are expensive for any consumer, but especially for those without prescription drug insurance. In that event, it is likely cost prohibitive for patients to obtain these drugs. Most patients, if their specialty medication is not available under the health plan, turn to selecting another medication, that may or may not work as well. To help people gain access to their specialty medications, drug manufacturers, such as AbbVie, have begun to offer financial assistance programs for individuals who are uninsured or whose income is below a certain threshold. These programs allow the patient to receive the specialty medication at little or no cost to them.
To access these programs, health plans will work with companies like Payer Matrix that specialize in locating these incentive programs and in helping patients navigate the approval process. Generally speaking, this involves amending the plan’s drug formulary to exclude these expensive specialty drugs from coverage under the health plan. The patient would then submit financial information to the program. If a patient qualifies for the assistance program, not only does he or she save money, but their health plan also avoids substantial claims that would have otherwise been incurred. If the patient is denied access to the program, oftentimes the health plan will include language that effectively guarantees coverage. In other words, the patient can obtain the medication from another source, is covered if he or she is rejected from the program, and the plan can potentially avoid underlying charges it would have otherwise incurred; a proverbial “win-win.” In exchange for this service, Payer Matrix charges a fee that is based on the projected “savings” to the plan.
AbbVie alleges that Payer Matrix defrauded their assistance program by enrolling insured participants into the program and making it appear that they were uninsured. The lawsuit also alleges that Payer Matrix continued enrolling patients even after AbbVie sent a cease-and-desist letter; going as far as whiting out their name and contact information to obscure their involvement in several applications submitted after the cease-and-desist warning.
Payer Matrix’s Answer to AbbVie’s Complaint:
Recently, Payer Matrix responded with a Motion to Dismiss the case. In their answer, Payer Matrix alleges that AbbVie failed to state any legal grounds for which a lawsuit can be filed. Meaning, even if all the facts that AbbVie is alleging are true, Payer Matrix did not violate the law.
AbbVie’s first allegations are based on the Illinois Consumer Fraud and Deceptive Trade Business Practices Act. However, Payer Matrix argues that this law is designed to protect consumers, like the patients who are taking AbbVie’s specialty drugs, and not drug manufacturers. Second, the Illinois Deceptive Trade Practices Act, a statute that requires Plaintiffs to articulate their allegations with particularity, prohibits companies from advertising to customers in a deceptive or misleading way. Payer Matrix argues that AbbVie did not meet this requirement. AbbVie cited only one video that Payer Matrix had on its website advertising their services to its potential customers, which is no longer is posted but, nevertheless, was not misleading.
Lastly, Payer Matrix disputes that the Northern District of Illinois is the correct court to hear the matter because Payer Matrix does not have adequate contact with the State of Illinois to avail itself to the jurisdiction of the court, a legal concept known as personal jurisdiction. In order to establish that the Illinois Court is the appropriate court to hear the case, the court will consider the residency of each party as well as the location of the deceptive conduct alleged. Payer Matrix argues that, although AbbVie is located in Illinois, Payer Matrix is not and further, Payer Matrix’s “deceptive conduct” did not allegedly occur in Illinois.
This case only involves Payer Matrix and some of the allegations, especially those alleging deceptive conduct, are beyond what is considered normal business practices. Nevertheless, AbbVie’s allegations that carving out expensive drugs from a plan’s formulary amounts to fraud or a “deceptive practice” could have a wider impact on the health insurance industry. As noted above, many plans have looked towards these programs as a way to lower underlying specialty drug costs. At this time, the court has not ruled on Payer Matrix’s Motion to Dismiss.