Overview
On February 9, 2023, California’s attorney general announced a $215 million settlement with Centene Corp., resolving a qui tam action that we filed alleging the healthcare company fraudulently processed pharmaceutical claims for the Golden State’s Medi-Cal program.
As special counsel to more than a dozen state AGs in their respective investigations of pharmacy benefit managers (PBM) that provide pharmacy benefits and services to their state’s Medicaid program and state employee health plans, we have helped our clients achieve over $950 million in settlements against Centene, alone, since June 2021.
In addition to Centene, the PBMs under investigation by our clients include OptumRx, Express Scripts, and CVS Caremark. We have also assisted the Ohio attorney general in securing two settlements for approximately $20 million against OptumRx on behalf of two Ohio state health plans, and we are actively litigating a case on behalf of an Ohio pension plan against Express Scripts.
Impact
The complexity of the $482 billion PBM industry cannot be understated; many of the major players are vertically integrated companies, meaning that a single holding company has wholly owned subsidiaries that are health plan insurers, MCOs, PBMs and/or retail pharmacy chains.
Through these investigations and litigation, including qui tam actions, state attorneys general with Cohen Milstein’s assistance are effectively addressing PBMs abusive drug pricing practices and fraud, which have been costly to state healthcare programs, taxpayers, and patients. Importantly, in June 2022, the Federal Trade Commission launched a probe into PBM business practices, and on May 17, 2023, it announced an expansion of this probe. Similarly, both the Senate and House of Representatives have proposed new legislation addressing the underregulated nature of the industry, and states across the country have continued to work on applicable legislation. These coordinated tactics reflect how states, regulators, and law makers are trying to reign in and regulate the PBM industry to bring down the cost of healthcare and specifically the cost of pharmaceutical drugs.