Summary
A lawsuit filed in Albany's State Supreme Court accused the St. Louis firm of Express Scripts, Inc. (one of the largest pharmacy benefit managers) of pocketing $100 million in drug rebates by disguising the rebates as administrative fees or a similar term so that Express Scripts could keep the rebates instead of giving them to the State. U.S. Attorney General Eliot Spitzer called the action fraud. Express Scripts was accused of violating a $600,000 contract to negotiate the lowest price for drugs for state workers. Also, the company pressured doctors to switch patients' prescriptions and then collected fees from the new drug manufacturers.
Original source:
http://www.forbes.com/business/healthcare/feeds/ap/2004/08/04/ap1491385.html
Details
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New York authorities sued Express Scripts Inc., one of the nation's largest pharmacy benefit managers, for fraud, alleging the company pocketed as much as $100 million in drug rebates that should have gone to the state.
- Spitzer and state Civil Service Commissioner Daniel Wall accused the firm of violating its $600,000 contract to negotiate the lowest prices for drugs under health plans for state workers.
- The civil action against the St. Louis-based firm is the latest hit for the industry that manages prescription benefits.
- Pharmacy benefit managers are middlemen who negotiate on behalf of their clients for discounts from drug manufacturers.
- Medco Health Solutions, the largest manager, reached a settlement in April with 20 states that accused the company of pressuring doctors to switch patients' medications to boost profits.
- Last month Caremark Rx Inc. - the second-largest manager - revealed it was being investigated by attorneys general from 19 states.
- Lehman Brothers analyst Lawrence Marsh said the lawsuit will likely lead to public suspicion and industry reforms.
- "Especially in an environment where you are facing rising drug costs, and an environment where there is an increasing level of distrust of whether the drug industry is playing by the rules, it would not be surprising if drug cost managers could be seen as perpetuating some of these high costs," Marsh said.
- "All these lawsuits I think have already made an impact on the business practices," said Ed Kaplan, a health care consultant at Segal.
- Express Scripts said that it never recommends switches to a higher-cost drug in connection with any client's plan and does not accept pharmaceutical manufacturer funding for such programs.
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Friday, August 06, 2004
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