The Corner Newsletter: James Beard Award & An Important PBM Case in Michigan ( June 20th, 2025)
Welcome to The Corner. In this issue, we celebrate OMI’s own Claire Kelloway for receiving a James Beard Award for her reporting and examine how a case against two pharmacy benefit managers in Michigan could have implications for the industry nationwide.
Claire Kelloway Wins James Beard Award for Report on How Farm Bills Harm Black Farmers
Claire Kelloway, who manages the Open Markets Institute’s food program, was awarded a James Beard Foundation Media Award for her incisive reporting on how farm bills drove farm consolidation, pushed Black farmers off the land, and transferred federal farm support from the many to the few. Kelloway worked with the Food & Environment Reporting Network in the “Farm Bill Fight” series, which was published in Mother Jones. Kelloway, along with Teresa Cotsirilos and Bridget Huber, won in the Columns and Newsletters category, for a contribution titled, “The Farm Bill Hall of Shame.” OMI Executive Director Barry Lynn said the award is a “testament” to Claire’s “fearless journalism and deep commitment to exposing the corporate power consolidation that weakens our food system.
Open Markets Co-Hosts EU Polish Presidency’s Digital Summit in Gdansk
This week at the EU Digital Summit in Poland, the Open Markets Institute, Fundacja Panoptykon, Mozilla, Open Future Foundation, and the Future of Technology Institute hosted a discussion on building “European technological sovereignty and a resilient public sphere.” The discussion, which brought together officials, technical experts, and advocates from across Europe, focused on ensuring that any European program to subsidize development of digital infrastructure like data centers be governed by long-term public interest goals. This includes regulations designed to reduce the power of U.S tech monopolies, ensure the security and stability of core systems, and protect the full liberty of all users, including independent businesses.
A total of 12 organizations signed the joint statement, which calls for directing investment towards open, neutral, and interoperable alternatives, and using the Digital Markets Act to tackle Big Tech’s monopolistic practices in AI and cloud computing. Poland’s Deputy Prime Minister Krzysztof Gawkowski spoke approvingly of the statement, which was covered in Politico.
Michigan Pharmacy Benefit Manager Antitrust Case May Deliver Big for All Americans
Tara Pincock
In April, the State of Michigan initiated a lawsuit against two pharmacy benefit managers (PBMs), Express Scripts (ESI) and Prime Therapeutics, for an alleged price-fixing scheme. Michigan charged the PBMs with entering into a collaboration that was essentially an agreement to not compete with one another. According to the lawsuit, this collusion harmed patients and pharmacies across the nation.
PBMs manage prescription drug benefits for health insurance companies. This entails picking the drugs that will be covered by insurance. In theory, PBMs are independent third parties who exploit their buying power to drive down the cost of drugs for patients. But many PBMs today are actually owned by other corporations — such as pharmacy chains and health care groups — and rather than pass on the lower prices to patients they use the savings to boost the corporation’s profits.
According to Michigan, the agreement between ESI and Prime made the problem worse. ESI is one of the “Big Three” PBMs in the country and has long exploited its market power to negotiate low reimbursement rates with pharmacies that wanted — or needed — to be part of its network. Prime, by contrast, with a mere 3% of the national market has historically had to offer pharmacies both higher rates and lower fees to convince them to join its network. The difference in costs was substantial. When competing with the Big Three — which, in addition to ESI includes Caremark Rx and OptumRx — Prime’s reimbursement rates for pharmacists were at least 20% higher.
The lawsuit could prove important in clarifying the line between collaboration and collusion. ESI and Prime presented their deal as a simple contractual arrangement between independent corporations, whereas Michigan argued that it was an end run around merger laws. In antitrust law what matters is not the nature of the agreement but the ultimate effect of the agreement. And in this case, the deal delivered ESI an 89% market share in Michigan. As per Michigan’s complaint, ESI ended up with what was “likely the largest share of the market ever achieved by a single PBM within a single U.S. state,” and hence almost absolute power over pharmacies when negotiating reimbursement rates.
A lot of what we know about this secret collaboration stems from an arbitration between Prime and one of its customers, AIDS Healthcare Foundation (AHF). AHF accused Prime of fixing the drug prices for which Prime was required to reimburse AHF. Earlier this year, the arbitrator found Prime liable for violating the antitrust laws and ordered it to pay AHF treble damages, which equaled more than $10 million.
While ESI was not a party to that action, the arbitration revealed that Prime had recently changed the rates that it paid to pharmacies and providers to align with ESI’s retail network rates. To achieve this, ESI prohibited the smaller PBM from pricing its services below clearly established levels and monitored Prime’s actual pricing arrangements to ensure compliance. In return for being allowed to use ESI’s retail network rates, Prime paid ESI an administrative fee per transaction.
Both corporations immediately benefitted from the arrangement. Prime, for instance, increased its earnings by as much as 20%. According to Michigan, “Prime has stated that it has ‘saved’ at least $2.5 billion as a result of its Agreement with ESI, cost reductions that reflected its nationwide reduction of reimbursements to retail pharmacies.” ESI, on the other hand, earned “significant profits” from the administrative fees.
The agreement allowed ESI to claim Prime’s members as part of its own network, which in turn increased its bargaining power in negotiations. Prior to the agreement, ESI had around 75 million insured members. That number jumped to more than 100 million when Prime’s members were added.
Besides higher prices for patients, the arrangement also eroded service. In 2024 alone, almost 300 retail pharmacies in the state closed their doors. While ESI’s market power wasn’t the only factor, it is a major cause. Such closures tend to hit low-income and disadvantaged communities the hardest. At least 50% of Detroit’s neighborhoods have become pharmacy “deserts,” and the problem is even more acute in the state’s Upper Peninsula.
Because this scheme had a national impact, there is no reason to limit antitrust action to the state boundaries of Michigan. Law enforcers in other states and at the federal level should send a strong message that businesses cannot contract around the antitrust laws. How much ESI was able to increase its market share across the nation is still an unknown. What is known is that the scheme is illegal and the parties must be held accountable.
📝 WHAT WE'VE BEEN UP TO:
Open Markets Institute’s senior reporter Karina Montoya published an article in ProMarket explaining why remedies in the Department of Justice’s case against Google for monopolizing search are focused on spinning off the tech giant’s Chrome web browser. Montoya writes that during the trial, “Chrome emerged as an essential fulcrum to Google’s search monopoly, both as a barrier to entry in internet search and a source of data scale.”
Open Markets reporter Austin Ahlman published an article in The Intercept positing that the recent withdrawal of corporate sponsors from Pride events offers an opportunity to return Pride to its grassroots origins. “This devil’s bargain with big business has devastated our own community’s ability to be good allies to those suffering from corporate abuses,” Ahlman writes. This piece was quoted in Forbes.
Jacobin published a critique of the Abundance agenda by Open Markets chief economist Brian Callaci, in which he takes a dim view of the ideology’s faith in deregulation’s ability to unleash private capital. “Capitalists don’t want to make stuff; they want to make profits,” Callaci writes, noting investors often prefer share buybacks to making productive investments. “Production itself, from the perspective of capitalist firms, is merely a by-product of profit-making.”
Dr. Courtney Radsch, director of Center for Journalism & Liberty at Open Markets, appeared on a podcast hosted by the International Bar Association to discuss the troubling impact of billionaires like Elon Musk on democracy and the rule of law. She pointed out that these moguls, through their vast control over social media platforms, are simultaneously shaping public narratives while undermining journalism.
The Nation published an article written by OMI ally Zephyr Teachout, citing Open Markets’ groundbreaking report “Engineering the Cloud Commons,” released last month, which explores how three tech giants — Amazon, Microsoft, and Google — use a range of aggressive tactics, including discriminatory pricing for different customers and barriers to switching providers, to maintain their dominance in the cloud market. “They are particularly dangerous with the cloud because, as the report details, there are ‘innate characteristics of the market — massive barriers to entry, huge capital requirements — that already make concentration very likely, though not inevitable,” Teachout writes.
The Capital Forum quoted OMI senior legal analyst Daniel Hanley on the implications of a refusal-to-deal case, FTC v. Deere and Co. Calling the alleged abuse of market power in the case “so clear and obvious,” Hanley said, “Any judge would have to be asking themselves if not this situation, then when, what else could be out there, what does it mean if there is a law on the books that doesn’t work.”
The Ecologist cites Open Markets senior fellow Cori Crider’s argument that Palantir, which is involved in surveillance and military contracts, should not be allowed to manage public services like the UK’s National Health Service due to ethical concerns.
🔊 ANTI-MONOPOLY RISING:
European regulators will investigate Universal Music Group’s proposed $775 million acquisition of Downtown Music to determine whether the deal adheres to the EU Merger Regulation. The deal met certain thresholds for review in Austria and the Netherlands, which asked the the European Commission to probe the deal. (Variety)
France’s Competition Authority announced its first-ever no-poach fines today concerning two agreements between four companies in the engineering, technology consulting, and IT services sectors aimed at prohibiting hiring each other’s employees. Three companies were fined a total of €29.5 million, while one company submitted a a leniency application. (Autorité de le Concurrence)
The Department of Justice is reviewing Google’s $32 billion bid to purchase cybersecurity company Wiz to determine whether it illegally limits competition. (Bloomberg)
The Netherlands competition body prevailed against Apple’s appeal against an order to amend its App Store rules after it was found to have abused its dominant position to charge an excessively high commission for dating app subscriptions. The national court also upheld the agency’s €50 million noncompliance penalty. (Authority for Consumers & Markets)
EU regulators will launch an investigation into the $36 billion merger between Mars, which makes Snickers and M&Ms and Pringles maker Kellanova, which could require the candy giant to sell off assets. (Reuters)
📈 VITAL STAT:
33%
The size of stake OpenAI would like Microsoft to hold in a restructured partnership, down from the 49% stake Microsoft currently owns (Reuters)
📚 WHAT WE'RE READING:
New York Times Podcast: The Progressive Regulator with Trumpist Fans: Watch, listen to, or read former Federal Trade Commission chair Lina Khan’s interview with NYT columnist Ross Douthat. Khan addresses Republican sympathy for an antimonopolist agenda, saying it reflected genuine concern for unchecked corporate power, especially in the technology sector.