Federal and State Litigation Regarding Pharmacy Benefit Managers
Compiled and Summarized by the Law Offices of David Balto
In just the last few years, the major PBMs (CVS Caremark, Express Scripts, Optum Rx, Prime Therapeutics ) have faced numerous federal or multidistrict cases over allegations of various misconduct -- stemming from clawbacks of consumer copays; fraud; misrepresentation to plans, patients, and providers; unjust enrichment through secret kickback schemes; and failure to meet ethical and safety standards. While some of these cases are ongoing many have resulted in hundreds of millions of dollars in damages to states, plans, providers and patients so far. Below is a summary of PBM cases.
Kimberly A. Negron v. Cigna, Case No. 3:16-cv-01702 (D. CT)
Class action lawsuit against Cigna alleging violations of ERISA and RICO—that the company required network pharmacies to charge insured patients unauthorized and excessive amounts for prescription drugs, and established the spread and took illegal “clawbacks.”
Elan and Adam Klein, Leah Weav, et. al v. Prime Therapeutics, Express Scripts, and CVS Health, Case No 0:17-cv-01884 (D.MN.)
Class action lawsuit against three major PBMs—Prime Therapeutics, Express Scripts, and CVS Health –on behalf of EpiPen purchasers with ERISA health plans for contributing to EpiPen price inflation through rebates and breaching their fiduciary duty to plan members.
Boss v. CVS Health Corp., Case No. 2:17-cv-01823 (D.N.J.)
Class action lawsuit against leading US drug makers and pharmacy benefit managers – including CVS Health, Express Scripts and OptumRx – alleging collusion to fix prices for insulin, leading to skyrocketing costs and windfall profits for the companies.
Park Imrmat Drug Corp. v. Express Scripts, et al, Case No. 17-cv-00979 (E.D.N.Y.)
Pharmacy complaint against Express Scripts over an illegal scheme by Express Scripts and PBM co-conspirators, including CVS Health, to suppress competition from independent pharmacies in the markets for mail-order pharmacy services. The Pharmacy alleges conduct violations the federal antitrust Sherman Act, constitutes a breach of contract and violates certain states’ any willing provider laws.
In Re UnitedHealth Group PBM Litigation, Case No. 16-cv-3352 (D.MN.)
Class action lawsuit against Optum Rx parent, UnitedHealth alleging Optum required network pharmacies to charge patients unauthorized and excessive amounts for prescription drugs. Optum then clawed back these excessive payments by forcing the pharmacies to pay the unauthorized or excessive charges to Optum after collecting them from the patients.
Prime Aid Pharmacy Corp., v. Express Scripts, Inc., Case No: 2:16-cv-02182 (E.D. Mo.)
Prime Aid Pharmacy files antitrust law suit against Express Scripts for fraudulent scheme and anticompetitive behavior between specialty pharmacies and the specialty pharmacies that Express Scripts owns and operates.
Express Scripts receives subpoena from U.S. Attorney’s Office for the District of Massachusetts
U.S. Attorney Office seeking information about Express Scripts relationship with drug makers, charitable foundations they own that and provide assistance to federal health care program beneficiaries and specialty pharmacies.
Express Scripts receives subpoena from the U.S. Attorney of New York
U.S. Attorney’s office seeking information about the firm’s relationship with drug makers and prescription drug plan clients and payments schemes to and from both.
Richard Medoff v. CVS Caremark Corporation, et al., Case No: 1:09-cv-00554-JNL-PAS
A securities class action suit against CVS Caremark for False and Misleading Statements related to its merger and profitability related to substantial loss of business after CVS’s 2007 merger with Caremark resulted in a 2016 settlement in the sum of $48,000,000 million to the class action plaintiffs.
Anthem v. Express Script, Inc., Case No. 16-cv-2048 (S.D.N.Y.)
Anthem has accused Express Scripts of breaching their management services agreement by charging inflated prices and refusing to renegotiate in good faith. Among the several additional claims, Anthem said Express Scripts did not properly comply with regulations set out by the Centers for Medicare & Medicaid Services regarding Medicare Part D claims. Anthem is seeking $13 Billion in damages.
Burnett v. Express Scripts, Inc., Case No. 1:16-cv-04948 (S.D.N.Y.)
Express Scripts Inc. and Anthem are accused in a proposed class action of breaching their ERISA fiduciary duties that caused the plan participants to overpay for drug benefits. Specifically, plaintiffs accuse Express Scripts charged “above competitive pricing levels” and Anthem allowed these prices as part of a 10-year contract deal with the pharmacy benefit manager. This case was brought by plans sponsored by Verizon Communications Inc., AmTrust Financial Services and LG&E and KU Energy LLC and their 26,000 combined participants.
Trone Health Services Inc et al. v. Express Scripts, Case No.4:16-cv-01250-RLW (E.D. Mo.)
Trone Health Services Inc on behalf of all similarly situated pharmacies in the United State alleging Unfair Competition, breach of contract, breach of implied covenant of good faith and fair dealing, interference with economic advantage, violation of uniform trade secrets act and fraud for the practice of “slamming” to personally enrich Express Scripts. Slamming is the process of utilizing pharmacy information related to customers and customers’ prescriptions to forcibly switch customers from Plaintiffs’ retail pharmacies to Defendant’s own mail-based pharmacies. Trial by jury date not set yet.
United States ex rel. DiMattia et al. v. Medco Health Solutions, Inc., No. 13-1285 (D. Del.).
The United States alleged that Medco (now part of Express Scripts) violated the False Claims Act. In particular, it was alleged that Medco solicited remuneration from AstraZeneca in exchange for identifying Nexium as the “sole and exclusive” proton pump inhibitor on certain of Medco’s prescription drug lists. As a result of this deal, Medco received reduced prices on AstraZeneca drugs: Prilosec, Toprol XL and Plendil. Medco settled the case and agreed to pay $7.9 million to resolve the kickback allegations.
Kmart Co. v. Catamaran Co., No. 2015-L-008290 (Ill. Ct. Cl.)
Kmart alleges that Catamaran “improperly manipulated prescription reimbursements.” In particular, Kmart alleges that Catamaran cut payments to Kmart pharmacies and failed to reimburse Kmart for almost 28,000 pricing appeals. As a result of these pricing appeals, Kmart has suffered $38 million in damages. This case is ongoing.
Albert's Pharmacy, Inc. et al v. Catamaran Corporation, Civ. No. 3:15-cv-00290-UN2 (M.D. Pa.)
Fifty-five independent pharmacies sued Catamaran for illegal conduct. The parties allege that Catamaran inflated patient costs while simultaneously underpaying pharmacies. Specifically, the pharmacies argue that Catamaran set rates below cost, made pricing data inaccessible, did not update data, and provided no transparency on how drugs rebates are applied. As a result of Catamaran’s practices, the pharmacies’ business and continued delivery of patient care are at risk. This case is ongoing.
U.S. ex rel., et al. v. Novartis Pharmaceuticals Corp., No. 1:11-cv-08196 (S.D. N.Y.)
The United States sued Accredo (owned by Express Scripts) claiming that Accredo recommended the drug Exjade to Medicaid patients in exchange for kickbacks from Novartis Pharmaceuticals Corp., which markets the drug. Accredo settled the matter paying $60 million to the federal government and various states.
John Doe v. Medco Health Solutions Inc., et al., Case No. 1:11-cv-00684 (D. Del.)
A relator on behalf of the United States, California, Florida and New Jersey brought a False Claims Act case against Medco. The case claims Medco (now a part of Express Scripts) defrauded state and federal health insurance programs by accepting undisclosed discounts from drug manufacturers and not passing on the savings on to its clients. This case is ongoing.
HM Compounding Services v. Express Scripts, Case No. 14-cv-01858 (E.D. Mo.)
Express Scripts is facing an antitrust conspiracy suit in which the plaintiff a compounding pharmacy, has alleged Express Scripts engaged in a conspiracy with other major PBMs to exclude competing compounding pharmacies from their network. As a result, competition within the compounding industry has been foreclosed and consumers have been routed to the PBMs captive pharmacies. The case is ongoing, and the plaintiffs have survived a motion to dismiss.
United States v. CVS
CVS was forced to pay $22 million to resolve federal allegations that its pharmacies sold narcotic painkillers not prescribed for legitimate medical purposes.
Grasso Enterprises, LLC, et.al., v. Express Scripts, Inc., Case No: 4:14-cv-01932 (E.D. Mo.)
Numerous compounding pharmacies sued Express Scripts alleging that the company intentionally cut compounding spending and illegally terminated compounding pharmacies from the Express Scripts’ network. This case is ongoing.
United States ex rel. Well v. CVS Caremark, Inc., Civil Action No. SA:11-CV-00747 (W.D. Tex.).
The United States filed a False Claims Act suit against Caremark for knowingly failing to reimburse Medicaid for prescription drug costs paid on behalf of Medicaid beneficiaries who also were eligible for drug benefits under Caremark-administered private health plans. Caremark settled the case, paying the federal government $6 million.
Securities and Exchange Commission v. CVS Caremark Corp., Civil Action No. 14-177-ML (D.R.I.)
Stemming from 2009, CVS Caremark agreed to pay $20 million to settle charges brought by federal securities regulators that it misled investors and committed accounting violations.
Uptown Drug v. CVS Caremark, Case No. 12-cv-6559 (N.D. Cal.)
Class of independent pharmacies filed suit against CVS Caremark alleging violations of California’s unfair trade practice law by forcing maintenance prescriptions adjudicated by CVS Caremark’s PBM business into CVS retail pharmacies, to the detriment of California pharmacies. The case is pending before the Ninth Circuit Court of Appeals.
In the Matter of CVS Caremark Co., FTC No. 112 31210
The Federal Trade Commission filed a complaint against CVS Caremark for misrepresenting the prices of certain Medicare Part D prescription drugs at CVS and Walgreens pharmacies. The misrepresentation caused seniors and disabled consumers to pay significantly more for critical medications. CVS Caremark settled, paying refunds to 13,000 consumers for a total of $5 million.
HHS v. CVS
CVS agreed to pay $2.25 million to resolve allegations by both the Department of Health and Human Services and Federal Trade Commission that it violated the Health Insurance Portability and Accountability Act (HIPAA).
Washington v. Caremark Rx., No. 08-2-06098-5-SEA (Wash. Sup. Ct.)
29 attorney generals, including the Washington Attorney General, alleged that Caremark engaged in deceptive trade practices, did not inform clients of retained profits from drug switches, and improperly restocked and reshipped previously dispensed drugs. Caremark settled the matter paying $41 million to the states and agreed to a change in business practices.
In re Express Scripts, Inc. PBM Litigation, No. 4:05-md-1672-HEA (E.D. Mo.)
Numerous states sued Express Scripts alleging numerous violations of consumer protections. The violations included deceptive business practices by illegally encouraging doctors to switch patients to different brand name medications and increased spreads and rebates from manufactures without passing the savings onto the plans. Express Scripts paid $9.3 million to settle the case, accepted restrictions on its drug switching practices, and adopted a code of professional standards.
United States of America v. Merck-Medco Managed Care L.L.C., et al., No.: 00-cv-737 (E.D. Pa.)
A multistate whistle blower lawsuit filed against Medco for violations of both federal and state False Claims Acts alleging defrauding the government, increasing drug prices, and failing to comply with state-mandated quality of care standards. Medco settled and paid a total of $184.1 million.
United States of America, et al. v. AdvancePCS, Inc., No. 02-cv-09236 (E.D. Pa.)
A whistleblower suit against Advanced PCS (now a part of CVS Caremark) alleged that Advanced received kickbacks from drug manufacturers, induced customers to sign contracts with the PBM, and submitted false claims. Along with a $137.5 million in settlement, Advanced received a five-year injunction and was forced to enter into a Corporate Integrity Agreement.
David A. Balto
Attorney At Law
Law Offices of David Balto
1325 G Street, N.W.
Washington, DC 20005