Medco Settles $29.3 Million in Deceptive Trade Practice Claims
April 2004 (from AMNews)
Pharmacy benefit managers are another level of bureaucracy between the patient and their health care providers. Finally, this group is coming under scrutiny. Long thought to be operating for the benefit of the insurance company rather than the patient, details in the present Medco suit have confirmed that to be the case.
Attorneys General for 20 states have reached a $29.3 million settlement with Medco Health Solutions, Inc. (the world’s largest PBM). The claims filed in state supreme courts under the state deceptive trade practice laws alleged many deceptive trade practices.
The AG’s alleged that Medco encouraged physicians to switch patients’ prescriptions to drugs that Medco claimed would result in savings to health plans and patients, when in fact, these switches increased cost to patients and physicians. In addition, Medco allegedly failed to disclose to prescribers that drug-switching practices benefited the PBM.
This switching also increased rebate payments from drug manufacturers like former Medco parent company, Merck.
Examples listed in the suit included asking physicians to switch patients from a cholesterol-lowering medication, Lipitor (Pfizer) to Zocor (Merck). Also, Medco promoted Vioxx (Merck) ahead of Celebrex (Pharmacia) and Prilosec (Merck and Pharmacia jointly) ahead of Prevacid (Abbott).
The settlement prohibits Medco from soliciting drug switches when the net cost of the proposed drug exceeds the prescribed drug, the prescribed drug has a generic equivalent and the proposed drug does not, the switch is made to avoid generic drug competition, or it is made more often than once in two years within a therapeutic drug class for any patient.
Also, the settlement requires Medco to disclose to prescribers the actual cost savings and difference in co-payments, the PBM’s financial incentives for the switch, and material and side-effect differences between the drugs. The settlement requires authorization from the prescriber for all drug switches.
“This case shows how pharmaceutical benefit managers previously hid from consumers, doctors, and health plans that they were switching prescriptions to promote their own profits,” said New York Attorney General Eliot Spitzer.
Medco will pay $20.2 million of the $29.3 million to states in restitution and $2.5 million to identifiable patients who incurred expenses related to a switch.
The multi-state investigation began in 2002 in many states including Oregon and Washington.
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