Ohio’s attorney general on Monday said he had filed a lawsuit against UnitedHealth Group Inc’s OptumRx unit; saying the pharmacy benefit manager had overcharged the state nearly $16 million for prescription drugs. Ohio Attorney General Dave Yost’s lawsuit followed a probe into the extent pharmacy benefit managers (PBMs); like OptumRx had engaged in pricing practices that resulted in the state overpaying for drugs for people covered by state health programs.
The probe, begun under Gov. Mike DeWine before he left his position of attorney general earlier this year; came amid public concerns about skyrocketing drug prices and the role; that PBMs as pharmacy middlemen play in contributing to the costs. Yost accused OptumRx of failing for nearly three years to provide agreed-upon discounts for generic drugs purchased; by injured workers submitting claims to the Ohio Bureau of Workers’ Compensation.
Pharmacy benefit managers
Medicaid in the United States is a federal and state program that helps with medical costs for some people with limited income and resources. It also offers benefits not normally covered by Medicare; including nursing home care and personal care services. The Health Insurance Association of America describes Medicaid as a government insurance program; for persons of all ages whose income and resources are insufficient to pay for health care.
“Our review of PBM practices throughout state government is still ongoing,” Yost said in a statement. These are the first raindrops, but there is a storm a-comin’. The lawsuit, filed on Friday in Franklin County Court of Common Pleas; seeks at least $15 million in compensatory damages and $15 million in punitive damages.
OptumRx did not immediately respond to a request for comment. It has previously said the state’s overcharging claims are “without merit.” PBMs negotiate drug prices for employers and health plans. They typically demand steep discounts off the drugmakers’ list prices; but for medicines in exchange for including their products on the PBMs’ preferred formularies; or lists of drugs approved for reimbursement.
Drugmakers’ list prices
In Ohio, the Bureau of Workers’ Compensation and the state’s Medicaid program; contract with PBMs to manage drug prescriptions for the agencies’ clients. Yost, who was elected attorney general in November, previously served as the state’s auditor. In that role, he released a report in August that found PBMs had charged the state’s Medicaid program; an average “spread” of 31% for generic drugs, billing $208 million more from April 2017 through March 2018; than it cost to reimburse pharmacies.
OptumRx is the PBM for one of Ohio’s five Medicaid managed-care plans. CVS Health’s CVS Caremark unit acts as the PBM for the other four. The two companies administer $2.5 billion in annual Medicaid drug spending for Ohio. OptumRx had also contracted with the workers’ compensation agency. But last year, the agency announced it had hired another company to manage its pharmaceutical program; but for injured workers amid claims OptumRx overcharged it.