BY NANCY
COLE
ARKANSAS
DEMOCRAT-GAZETTE
August 31, 2004
Arkansas is participating in a
multistate investigation into the practices of pharmacy benefit managers,
according to the state attorney general’s office.
"Between 25 and 30 states" are taking part in the inquiry, agency spokesman
Matt De-Cample said Monday.
Pharmacy benefit managers negotiate with drug manufacturers on behalf of
employers and health plans for discounts.
Some consumer advocates worry that pharmacy benefit managers’ cost-cutting
strategies potentially undermine patient care.
A number of states have passed legislation to regulate the industry due to
become the key administrator of the federal Medicare drug benefit plan that
begins in 2006.
Pharmaceutical companies have warned that price controls appear increasingly
likely once the Medicare program begins covering prescription drugs.
Recent studies by AARP and Families USA found that the price of name-brand
prescription drugs most used by senior citizens had increased by rates
substantially above inflation for the past four years, undercutting the
potential value of the new Medicare drug discount card.
The Pharmaceutical Research and Manufacturers of America responded that most
of the increase results from demand for the products.
The largest pharmacy benefit manager, Medco Health Solutions, earlier this
year agreed to pay $29.3 million to settle charges brought two years ago by 20
state attorneys general that the company switched patients’ medications without
their knowledge and then pocketed the savings.
New York Attorney General Eliot Spitzer announced earlier this month that his
state would sue Express Scripts Inc., the only company providing pharmacy
benefits to New York
state’s civil service employees.
California’s legislators recently passed a bill to regulate pharmacy benefit
managers and Gov. Arnold Schwarzenegger has until Sept. 30 to sign the bill or
veto it, or the bill becomes law without his signature.
The Pharmaceutical Care Management Association bristles at criticism and says
increased regulation will only cut into the estimated 25 percent savings they
extract from drug manufacturers.
"There’s a whole emerging body of evidence that talks about the value that we
provide and the savings that we provide," said spokesman Phil Blando, citing
recent reports by the Government Accountability Office, Federal Trade
Commission, and Congressional Budget Office.
"PBMs are going to be integral to any solution in terms of expanding access
and driving down the cost of prescription drugs," he said.
In late June a group of employees with the Hot Spring County Solid Waste
Authority sued three of the nation’s largest pharmacy benefit managers. The
workers allege that the pharmacy benefit managers put their interests ahead of
their clients’ pocketbooks.
"This scam has been going on for years and is the single largest contributor
to high prescription drug cost," said attorney Don Spears, a partner in the
Little Rock
firm of Whetstone & Spears, which is representing the Hot Spring County public
employees.
"This case is the first-ever attempt to expose this scheme and get relief for
the people of Arkansas."
The lawsuit charges that Caremark Inc., AdvancePCS, and Medco Health
Prescription Solutions failed to share drug rebates, pocketed a share of
inflated drug prices, designed their lists of preferred drugs on the basis of
kickbacks rather than cost-effectiveness, pushed certain drugs to earn extra
manufacturer rebates, and failed to share discounts from mail-order pharmacies.
Nashville, Tenn.-based Caremark and AdvancePCS, which merged in March, have
denied all of the allegations. New Jersey-based Medco, which had been a
subsidiary of drug maker Merck & Co. Inc. until last year, declined to comment.
Also named as defendants are UnitedHealth Group, the health insurance carrier
for Hot Spring County Solid Waste Authority, and Hatcher Insurance Agency, the
Little Rock-based agency through which the insurance coverage was bought.
Minnesota-based United-Health Group and the Hatcher Insurance Agency could
not be reached for comment.
The lawsuit was filed originally in the Circuit Court of Hot Spring County
but was transferred at the request of Caremark and AdvancePCS to the U.S.
District Court for the Western District of Arkansas in Fort Smith.
The plaintiffs are seeking class-action certification of the lawsuit