After years, pharmacy-middleman suit might finally come to trial

By: - May 16, 2022 3:55 am

Ohio Attorney General Dave Yost. (Photo by Justin Merriman/Getty Images)

Since at least 2016, Ohio pharmacists have been accusing large companies acting as pharmacy middlemen of abusive practices, which they deny. And since 2019, the state has been accusing them as well, in the form of lawsuits.

Now, after years of wrangling in court, some of that litigation might be headed to trial.

The middlemen, known as pharmacy benefit managers, operate behind the scenes, but they’re part of some of the largest corporations in the United States. And the big three, which handle prescription transactions for more than 70% of covered Americans, are part of companies that also own major insurers.

Pharmacy benefit managers, or PBMs, negotiate rebates from drugmakers, in part by controlling which drugs are covered by insurance and at what level. They contract with networks of pharmacies and decide how much to pay them for the prescriptions they dispense.

In 2016, two of the big-three PBMs — CVS Caremark and OptumRx — were working for Ohio’s five Medicaid managed-care companies. Late that year, many Ohio pharmacists complained, the companies slashed their reimbursements and then CVS — which was also their biggest retail competitor — offered to buy them out.

CVS and OptumRx insist their reimbursements have been fair and that their actions have saved money for consumers and taxpayers. But amid a newspaper investigation and one by then-Auditor Dave Yost, the Ohio Department of Medicaid in 2018 commissioned an investigation that showed that in 2017, CVS and OptumRx charged taxpayers $244 million more for Medicaid drugs than they paid the pharmacies that dispensed them.

While that was a bombshell, big portions of the analysis were redacted. Under prodding from lawmakers and the press, then-Medicaid Director Barbara Sears moved to release an unredacted version. CVS and Optum sued on July 16, 2018 to block release.

That suit continues, even though The Columbus Dispatch was able to get behind the redactions and show that CVS in 2017 reimbursed big competitors such as Kroger and Walmart much worse than it did its own pharmacies.

The case has languished for almost four years, with Franklin County Common Pleas Judge Andy D. Miller most recently granting another delay last month.

But another, perhaps more substantive case, appears to be moving ahead.

After he became attorney general, Yost in 2019 sued OptumRx over its dealings with the Ohio Bureau of Workers’ Compensation. That suit claims that Optum defrauded the agency of $16 million by not providing guaranteed discounts and through other practices.

It’s slated for trial before Franklin County Common Pleas Judge Michael Holbrook on Oct. 24, and the parties seem to be getting ready for trial.

“We are in the discovery process and planning accordingly for our trial date in October,” Yost’s spokesman, Steven Irwin, said in an email on Tuesday.

A spokesman for OptumRx again denied that the company had done anything wrong.

“We are honored to have delivered access to more affordable prescription medications for the Ohio Bureau of Workers’ Compensation and Ohio taxpayers,” the spokesman, Andrew Krejci, said in an email. “We continue to believe these allegations are without merit and will vigorously defend ourselves.”

Yost also has sued another of the big-three PBMs, Express Scripts, on behalf of the Ohio Highway Patrol System. The suit seeks an unspecified dollar amount after Express Scripts “egregiously charged for services it didn’t deliver,” Yost said. 

Express Scripts also denied wrongdoing. The case now is slated for trial before Franklin County Common Pleas Judge Colleen O’Donnell in June 2023.

When he announced the workers’ comp suit, Yost said it was the start of a flurry of litigation against the pharmacy middlemen, and his office is said to be pursuing other claims.

He tallied a big win last year after he sued Medicaid managed-care provider Centene over dealings using its in-house PBMs. Centene didn’t admit wrongdoing, but it agreed to pay Ohio $88.3 million and set aside an additional $1 billion to settle similar claims in states that hadn’t even sued.

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Marty Schladen
Marty Schladen

Marty Schladen has been a reporter for decades, working in Indiana, Texas and other places before returning to his native Ohio to work at The Columbus Dispatch in 2017. He's won state and national journalism awards for investigations into utility regulation, public corruption, the environment, prescription drug spending and other matters.

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