Ohio sues PBM over its pricing practices

At the beginning of last year, Ohio Attorney General Dave Yost observed that he often gets asked whether another shoe would drop in the state’s battle to rein in drug chain middlemen known as pharmacy benefit managers.

‘Baby, we’re in DSW,” Yost remarked, referring to the giant shoe store chain.

He had just taken action against Optumrx, accusing the PBM of overcharging the Ohio Bureau of Workers’ Compensation by some $16 million.

But a year and a half went by and nothing new came from the attorney general’s office except motions in the workers’ comp suit. Still, the office insisted the effort continued with investigatory work behind the scenes.

Monday the probe burst into public view with a 17-page lawsuit from Yost’s office accusing PBM Express Scripts of “silently pocketing millions of dollars in overcharges“on prescription drugs through the Ohio Highway Patrol Retirement System.

“I intend to shed light on the PBM business model and bring true transparency – they need to answer the tough questions and repay what they owe,“Yost tweeted.

The PBM repeatedly violated its health-care agreement with the retirement fund “by not dealing truthfully, accurately and honestly with it,” says the lawsuit filed in Franklin County Common Pleas Court.

“This particular PBM egregiously charged for services it didn’t deliver,” Yost said in a release. “Its repeated breaches cost Ohioans millions, and we want our money back.”

Jennifer Luddy, director of corporate communications for Express Scripts, said the company would not comment on the lawsuit or Yost’s remarks about it.

Scott Knoer, CEO of the American Pharmacists Association and formerly of the Cleveland Clinic, tweeted: “Bravo to Ohio’s dragon slayer @yost4ohio for working to bring taxpayer justice to yet another egregious PBM contract that this time soaked the Ohio Highway Patrol Retirement System. The PBM drug pricing games must to come to an end!”

Yost’s lawsuit comes on the heels of the Ohio Department of Medicaid’s failure to meet a July 1 legislative deadline to ready the state for a single PBM, instead of the three now serving the agency that provided health coverage for the poorest Ohioans. The agency also missed the legislature’s deadline to use $100 million allocated to subsidize community pharmacies serving low-income clients.

Express Scripps Inc. is now part of Cigna’s Health Services segment, which reported $70.8 billion in adjusted revenues for the nine-month period ending Sept. 30, 2019, according to Yost’s office.

The PBM had claimed “that through its ’solutions’ it can ’deliver better value’’ to its pension system clients” like the Ohio pension fund.

“But defendant ESI’S ’solutions’ only served defendant ESI as it repeatedly breached the agreement to drive up plaintiff HPRS’S costs by overcharging plaintiff HPRS,” the lawsuit alleges.

Those contract breaches “were committed knowingly in bad faith and with the intent to deprive plaintiff HPRS of the benefit of its bargain and to frustrate its reasonable expectations under the agreement” between the pension fund and Express Scripts, the court filing said.

One tactic used by the PBM cited in the litigation: It “repeatedly misclassified and/or continued to classify generic drugs as brand drugs.” Brandname drugs typically cost many times more than generics.

A specific amount of damages was not sought. Since only Express Scripts has the full financial records, Yost’s office asked the judge to order them produced so they can be examined to determine the full extent of damages to Ohio.

“It’s no secret that PBMS have been keeping secret their prescription pricing in order to evade public scrutiny and rake in revenue,” Yost said. “I intend to shed light on their business model and bring true transparency to the process — they need to answer the tough questions and repay what is owed.”

And now Ohioans will wait to see if Yost has more shoes ready to pull out of the DSW warehouse — such as possible action against PBMS for Ohio’s other four state retirement funds. They are all far bigger than the pension fund serving the Highway Patrol, so the potential damages by PBMS presumably could be far bigger as well. drowland@dispatch.com @darreldrowland