O'Reilly Automotive alleges price-fixing scheme in lawsuit against major drug companies

Springfield-based auto parts retailer O'Reilly Automotive Inc. (Nasdaq: ORLY) has filed suit against several large pharmaceutical companies, alleging a wide-ranging price-fixing scheme related to diabetes medications.

The 187-page lawsuit, filed July 30 in the U.S. District Court for the District of New Jersey, alleges drugmakers Eli Lilly and Co., Novo Nordisk and Sanofi worked directly with pharmacy benefit managers including CVS Caremark, Express Scripts and OptumRx to artificially raise the price of diabetes medications such as insulin. UnitedHealth Group Inc., which owns OptumRx, is also among the defendants in the lawsuit, which states the New Jersey venue is proper "because each defendant transacts business, is found and/or has agents there.”

The lawsuit describes the relevant period of the alleged actions as 2006 to date, and it states that O’Reilly Automotive selected Express Scripts, now owned by Cigna, as its PBM in 2006 and has used it since. Pharmacy benefit managers are entities that administer prescription drug insurance benefits.

The lawsuit alleges the drug manufacturers have engaged in "lockstep behavior" where they colluded to raise prices. PBMs named in the lawsuit are accused of allegedly profiting from the insulin pricing scheme by keeping portions of "secret manufacturer payments" such as rebates.

O'Reilly Automotive alleges it has been harmed financially for years through its operation of a self-funded insurance plan for some 45,000 beneficiaries.

"These price increases do not derive from the rising cost of goods, production costs, investment in research and development, or competitive market forces," the lawsuit reads. "Instead, defendants engineered them to exponentially increase their profits at the expense of payors like plaintiff."

The lawsuit alleges violations of the Racketeer Influenced and Corrupt Organizations Act and the Missouri Merchandising Practices Act.

Through the lawsuit, O'Reilly Automotive is seeking a jury trial and for the defendants to cease alleged violations of Missouri law and RICO. Additionally, O'Reilly Automotive seeks punitive damages, restitution and reimbursement of attorney costs.

Online court records indicate the defendants have not yet responded to the lawsuit in federal court, and attorneys were not yet listed for defendants as of publication time. Court records indicate O'Reilly Automotive has retained Florida-based The Ferraro Law Firm PA, New York-based Leeds Brown Law PC and New York-based Sultzer & Lipari PLLC in the lawsuit.

O'Reilly Automotive ranked No. 7 in Springfield Business Journal's July 2024 list of the area's largest employers. The company reported 2,418 local employees and nearly 88,000 companywide employees at that time.