Prescription Drugs - Medicine & Money
The truth about prescription drug costs.
Voters
Just a cost of doing business: PBMs pay multimillions in fraud judgments and settlements to avoid even more costly judgments. This is just the total for the biggest PBMs!
PBM Lawsuits
It appears that PBMs consider multimillion-dollar payouts to settle fraud claims to just be a cost of doing business. They’ve paid out nearly $3 million to the federal government alone, and numerous big-buck cases are in the pipeline.
Despite these settlements, PBMs are making record-setting profits from the money patients and employers pay for health care.
Antitrust attorney and former policy director of the Federal Trade Commission David Balto says that while PBMs offer the promise of controlling pharmaceutical costs, there is a pattern of conflicts of interest, self-dealing and anticompetitive conduct that ultimately means Texas consumers pay far more for drugs than necessary.
“The PBMs cannot avoid a simple truth,” Balto says. “No other market is faced by the landslide of lawsuits—by the Justice Department, more than 20 states, employers, unions, insurance companies and the most sophisticated businesses attacking the long history of fraudulent and deceptive practices of PBMs. And those cases have resulted in settlements and judgments of more than $200 million to date.
"The PBM market is unhealthy and needs a legislative fix. In more than
a decade as an antitrust enforcer at the FTC and the Justice Department I found
few markets with as significant competitive and deceptive problems,” Balto
said.
He also notes that PBMs basically are claims processors. They aren’t purchasing
agents—they don’t buy drugs. They aren’t insurance companies—they
don’t incur risks. They don’t serve consumers face to face. Yet
they make an astronomical amount of money by playing a shell game with businesses
and consumers—securing rebates but refusing to share them or even reveal
them.
A partial list of major fines and settlements paid to the federal government includes:
- $138.5 million from AdvancePCS, a subsidiary of Caremark, Inc. in the pharmacy benefit management business, to resolve allegations that AdvancePCS exacted kickbacks, disguised as administrative fees and sales and service agreements, from drug manufacturers in exchange for marketing their drugs to providers reimbursed by federally insured health programs; and accepted kickbacks in the form of cash payments and rebates from drug manufacturers in exchange for marketing their drugs to providers reimbursed by federally insured health programs. Additionally, it was alleged the company paid kickbacks to providers reimbursed by federally insured health programs to ensure that AdvancePCS was selected or retained as the pharmacy benefit manager for the health plans.
- $155 million against Medco Health Solutions Inc. in fines to settle fraud, kickback and other charges brought by federal prosecutors in Philadelphia in a whistleblower case dating to 1999. The agreement involves multiple cases of alleged wrongdoing by Medco, the nation's No. 2 pharmacy benefit manager. The settlement comes nearly six months after the two sides announced an agreement in principle shortly before a trial was to begin.
Partial List of lawsuits against pharmacy benefit managers:
- AdvancePCS (now Caremark) - $137.5 million to Department of Justice
- Caremark - $161 million to Federal Government; pleaded guilty to two counts of criminal fraud
- Medco - $29.3 million to 20 State Attorneys General; drug switching
- Medco - $42.5 million to employers; Federal ERISA lawsuit
- Medco - $155 million to Department of Justice
- Medco - $7.8 million to Ohio Teachers Retirement System; jury verdict - constructive fraud