Attorney generals from 28 states have reached a $9.3 million settlement with the pharmacy benefits management company Express Scripts Inc., over its activities in switching health plan participants and workers' compensation patients to cheaper prescriptions, it was announced.

PBMs enter into contracts with employer and governmental health plans to process prescription drug claims, to negotiate discounts with drug companies and participating retail pharmacies, as well as dispense drugs through PBM-owned mail-order pharmacies.

In recent years, they have been used increasingly as tool to reduce workers' comp medical care costs.

According to Massachusetts Attorney General Martha Coakley, who made an announcement of the agreement, the settlement generally prohibits Express Scripts from soliciting drug switches when:

o The net drug cost of the proposed drug exceeds the net drug cost of the originally prescribed drug.

o The originally prescribed drug has a generic equivalent and the proposed drug does not.

o The originally prescribed drug's patent is expected to expire within six months.

o The patient was switched from a similar drug within the last two years.

Additionally, the settlement requires Express Scripts to inform patients and prescribers what effect a drug switch will have on a patient's co-payment, what financial incentives were offered the PBM for certain drug switches, as well as material differences in side effects or efficacy between prescribed drugs and proposed drugs.

It also requires reimbursement of patients for out-of-pocket expenses for drug switch-related health care costs, and notification of patients and prescribers that such reimbursement is available.

Also, the company must obtain express, verifiable authorization from the prescriber for all drug switches; inform patients that they may decline a drug switch and the conditions for receiving the originally prescribed drug; and monitor the effects of drug switches on the health of patients.

The firm is required to adopt a certain code of ethics and professional standards. It must also refrain from making any claims of savings for a drug switch to patients or prescribers unless Express Scripts can substantiate the claim, and inform prescribers that visits by Express Scripts' clinical consultants and promotional materials sent to prescribers are funded by pharmaceutical manufacturers, if that is the case.

Ms. Coakley said the settlement is the third of its kind with a PBM, and is part of an effort to introduce "transparency and fairness to the PBM industry."

"Through the work of the state attorneys general–first with Medco, then Caremark and now Express Scripts–we have changed how these companies treat patients and doctors when they ask to change their prescription medications. Those requests now include full information on costs savings and the reasons for the proposed switch," said Ms. Coakley.

The details of the settlement were contained in an Assurance of Voluntary Compliance, filed today in Suffolk Superior Court, in Boston.

Express Scripts also will pay up to $200,000 in reimbursement to patients who incurred expenses related to certain switches between cholesterol-controlling drugs called statins.

Ms. Coakley said Massachusetts will receive a total of more than $255,000 from this settlement, including $65,000 in costs and fees, with the balance to be used to benefit low-income, disabled or elderly consumers of prescription medications, to promote lower drug costs for state residents, and to educate consumers concerning the cost differences among medications.

Today's settlement, Ms. Coakley said, asserts that Express Scripts engaged in deceptive business practices by not always acting in a manner consistent with its representations to consumers and employers about its PBM services.

Specifically, Express Scripts may have overstated the cost benefits of switching to certain brand name medicines, which may have resulted in additional medical costs for consumers. Additionally, Express Scripts did not clearly disclose to their clients' plans that rebates accrued from the drug switching process would be earned by Express Scripts, the settlement announcement noted.

Including with Massachusetts in the settlement are: Arizona, Arkansas, California, Connecticut, Delaware, District of Columbia, Florida, Illinois, Iowa, Louisiana, Maryland, Michigan, Mississippi, Missouri, Montana, Nevada, New Mexico, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Vermont, Virginia, and Washington.

Special Reports /

Drug Benefits Manager Agrees To Pay $9.3M, Alter Methods

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