Pharmacy middleman agrees to pay Ohio Workers’ Comp $15M, attorney general says

Company disputes that final agreement has been reached

By: - October 27, 2022 4:45 am

UnitedHealth Group headquarters. Photo from UHG media kit.

Ohio Attorney General Dave Yost says a major health care company has agreed to pay Ohio $15 million to settle claims against it. The company says there’s no settlement and that it continues to dispute Yost’s claims.

The impasse appeared to persist late Wednesday afternoon.

Yost on Tuesday announced that OptumRx, a huge pharmacy middleman, had agreed to pay the Ohio Bureau of Workers Compensation the money to settle claims that it overbilled the system between 2015 and 2018.

“Another shoe has dropped,” Yost said in a statement. “This is another win for Ohio — time for OptumRx to pay up.”

But asked about the matter, Optum denied that it had settled the nearly four-year-old case.

“We have not reached a final agreement with the Ohio Attorney General,” spokesman Andrew Krejci said in an email late Tuesday afternoon. “We continue to dispute his allegations and are honored to have delivered access to more affordable prescription medications for the Ohio Bureau of Workers’ Compensation and Ohio taxpayers.”

Yost sued Optum, part of UnitedHealth Group, and demanded $15.8 million. As a pharmacy benefit manager, Optum facilitates prescription transactions on behalf of UnitedHealth, the nation’s largest insurer

Optum negotiates rebates from drugmakers on terms that often are not transparent. It determines how much to reimburse the pharmacies that dispense drugs. And it bills payers such as private insurers and government programs like Medicare and Medicaid.

Community pharmacies and some watchdogs have for years said that the big three pharmacy benefit managers — Optum, CVS Caremark and Express Scripts — have used their heft and a lack of transparency to profit improperly. Amid newspaper scrutiny, the Ohio Department of Medicaid in 2018 hired an outside analyst that determined that in 2017, Optum and CVS billed the department $224 million more for prescription drugs than it paid the pharmacies that dispensed them.

In the case of the Bureau of Workers Compensation, Yost’s office alleged that Optum overcharged the bureau by $6 million in 2015, by $2.7 million between the beginning of 2016 and the end of October 2016 and by $7.2 million between Nov. 1, 2016, and Oct. 27, 2018.

One way he said Optum overcharged the bureau was by not giving it contractually guaranteed discounts for generic drugs. Yost touted news of the settlement as another win for the state when it comes to policing drug middlemen.

Yost spokeswoman Bethany McCorkle said her office didn’t anticipate that Optum would deny that the AGs case against the company had been settled.

“We were surprised to see a statement from OptumRx saying that they thought we didn’t have a deal,” she said in an email. “An agreement was reached. We are in conversations with OptumRx today to determine why they are trying to back out.”

Optum’s Krejci on Thursday said, “We continue to work with the State to resolve this outstanding issue, but do not have a final agreement in place.”

In addition to Optum, Yost has sued two other companies acting as drug middlemen for state agencies.

In 2021, he sued Centene Corp. over its dealings with the Medicaid department. The suit came after The Columbus Dispatch reported that a pharmacy benefit manager owned by Centene in 2017 appeared to bill the state $20 million for the same services that CVS Caremark said it provided. Centene agreed to pay Ohio $88.3 million in that case and set aside more than $1 billion to settle similar claims in other states.

Yost is also suing Express Scripts on claims that it failed to honor its contract with the Ohio Highway Patrol Retirement System and overbilled it by millions. That case is still pending.

“I said before that we will do everything in our power to protect Ohioans from PBMs, and we don’t plan to stop at $100 million in recoveries,” the attorney general said. “Stay tuned.”

The three largest pharmacy benefit managers control a combined 70% of that marketplace, raising concerns that they’re using their dominance to engage in anticompetitive practices. In addition, their parent companies raise concerns about “vertical integration” because they’re massive players in other parts of the health care space. 

Each corporation also owns a top-10 health insurer and they often require patients to get the most expensive, or “specialty,” drugs from their own mail-order pharmacies. Also, CVS owns the largest retail pharmacy chain in the United States.

In addition to all that, Optum and CVS are buying up thousands of doctors’ offices, meaning that a patient can be prescribed a drug, fill the prescription through her insurer and reconcile the transaction — all the while dealing with a single corporation. The Federal Trade Commission in June voted to investigate the companies’ practices.

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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.