Ohio attorney general accuses drug-pricing manager of bilking state – By Jim Provance (Toledo Blade) / March 18 2019
COLUMBUS — Calling it a raindrop in “a storm a-comin’,” Ohio Attorney General Dave Yost filed a lawsuit accusing a company contracted to serve as a middleman in negotiating prescription drug prices of fraudulently overcharging the state $15.8 million.
The suit against Texas-based pharmacy benefit manager OptumRX was filed late Friday in Franklin County Common Pleas Court after the 30-day clock ran out on the attorney general’s request for mediation.
It accuses the company, over three and a half years, of failing to pass through guaranteed discounts on generic drugs to the Ohio Bureau of Workers’ Compensation and misusing information drawn from its relationship with the agency to subsidize the prices it offered to its other clients.
The lawsuit contends that the state, seeing the way that some pharmacy benefit managers had come to take advantage of seller rebates to pad their bottom lines, had included a provision in its 2009 contract to require OptumRX to pass through such savings to the state. The pharmacy benefit manager was to accept solely administrative fees paid by the state per transaction as compensation.
It accuses the company of then inflating the prices it charged BWC without explanation to get around this requirement.
The state “learned that the sudden price increases were actually part of [OptumRX’s] strategy to subsidize lower prices charged to its other clients,” the suit reads. “By charging higher prices to [state agencies], Defendant could provide larger discounts to other clients while still meeting pricing guarantees it had made to its retail pharmacy partners concerning the average prices to be paid by [OptumRX’s] clients for certain products.”
It accuses OptumRX of knowing that pricing information it was providing to the state was false.
In an email statement, OptumRX said, “We are honored to have delivered access to more affordable prescription medications for the Ohio Bureau of Workers’ Compensation and Ohio taxpayers. We believe these allegations are without merit and are working with the state to resolve the bureau’s concerns in accordance with the terms of our contract.”
In addition to seeking to more than $15 million in compensation, the suit asks the court to impose $15 million in punitive damages against the company.
“Our review of PBM practices throughout state government is still ongoing,” Mr. Yost said. “These are just the first raindrops, but there’s a storm a-comin’.”
The investigation began under Mr. Yost’s fellow Republican predecessor, Mike DeWine, who is now governor. Mr. DeWine on Monday pledged to provide any information Mr. Yost needs to continue the investigation.
These middlemen have saved the state Department of Medicaid money overall, but a state audit last summer from then-auditor Yost revealed that they had been pocketing the difference between what they’ve been paid by the state and what they’d been paying to pharmacies.
The August audit showed the problem was worse in northwest Ohio than for the rest of the state. Mr. Yost complained to lawmakers that a lack of transparency at the time hampered his review.
“PBMs, left unchecked by careful contracting and vigorous enforcement, add an opaque layer of hidden expense to the American prescription drug market,” the lawsuit reads.
