After years, the lawsuit of a pharmacy middleman could finally go to trial
Since at least 2016, pharmacists in Ohio have accused big companies acting as pharmacy middlemen of abusive practices, which they deny. And since 2019, the state has also charged them, in the form of lawsuits.
Now, after years of wrangling in court, some of those disputes could go to trial.
The intermediaries, known as pharmacy benefit managers, operate behind the scenes, but they are part of some of the largest corporations in the United States. And the Big Three, which handle prescription transactions for more than 70% of covered Americans, are part of companies that also own large insurers.
Pharmacy benefit managers, or PBMs, negotiate discounts from drug manufacturers, in part by controlling which drugs are covered by insurance and at what level. They contract with pharmacy networks and decide how much to pay for the prescriptions they dispense.
In 2016, two of the big three PBMs — CVS Caremark and OptumRx — worked for all five of Ohio’s Medicaid managed care companies. By the end of that year, many Ohio pharmacists complained, the companies cut their reimbursements, and then CVS—which was also their biggest retail competitor—offered to buy them out.
CVS and OptumRx insist that their refunds have been fair and their actions have saved money for consumers and taxpayers. But amid a newspaper investigation and another from then-auditor Dave Yost, the Ohio Department of Medicaid commissioned a 2018 investigation that showed that in 2017, CVS and OptumRx billed taxpayers $244 million more for Medicaid drugs than they paid the pharmacies that dispensed them.
Although this is a bombshell, large parts of the analysis have been redacted. Spurred on by lawmakers and the press, Barbara Sears, then director of Medicaid, decided to release an unredacted version. CVS and Optum sued on July 16, 2018 to block the release.
This lawsuit continues, even though The Columbus Dispatch was able to get behind the redactions and show that CVS in 2017 reimbursed major competitors such as Kroger and Walmart much worse than it did for its own pharmacies.
The case has dragged on for nearly four years, with Franklin County Common Pleas Judge Andy D. Miller recently granting another delay last month.
But another case, perhaps more substantial, seems to be advancing.
After becoming attorney general, Yost in 2019 sued OptumRx over his dealings with the Ohio Bureau of Workers’ Compensation. This lawsuit alleges that Optum defrauded the agency of $16 million by not providing guaranteed discounts and through other practices.
The trial is scheduled before Franklin County Common Pleas Judge Michael Holbrook on October 24, and the parties appear to be gearing up for trial.
“We are in the discovery process and are planning our October trial date accordingly,” Yost spokesman Steven Irwin said in an email on Tuesday.
A spokesperson for OptumRx again denied that the company did anything wrong.
“We are honored to have provided access to more affordable prescription drugs for the Ohio Bureau of Workers’ Compensation and Ohio taxpayers,” spokesman Andrew Krejci said in an e -mail. “We continue to believe these allegations are without merit and we will defend ourselves vigorously.”
Yost also sued another of the Big Three PBMs, Express Scripts, on behalf of the Ohio Highway Patrol System. The lawsuit seeks an unspecified dollar amount after Express Scripts “was blatantly charged for services it failed to provide,” Yost said.
Express Scripts has also denied any wrongdoing. The case is now scheduled to go to trial before Franklin County Common Pleas Judge Colleen O’Donnell in June 2023.
When he announced the workers’ lawsuit, Yost said it was the start of a wave of litigation against pharmacy intermediaries, and his office would pursue other claims.
He scored a big win last year after suing Medicaid managed-care provider Centene over transactions using its in-house PBMs. Centene didn’t admit wrongdoing, but it agreed to pay Ohio $88.3 million and set aside an additional $1 billion to settle similar claims in states that didn’t even have not sued.
This story was republished from Ohio Capital Journal under a Creative Commons license.