Pharmacy giant Medco settles probe with states

Monday, April 26, 2004 | 11:04 a.m.

SUN STAFF AND WIRE REPORTS

The nation's largest pharmacy benefits manager said today it has agreed to pay $29 million to settle allegations by 20 states that it was switching patients to medications to save itself money, not to benefit the patients.

Under the agreement, Nevada will receive about $200,000, said state Consumer Advocate Tim Hay. That payment, which could be received within the next three months, will go to yet-to-be-determined statewide health care programs, he said.

Nevada's payment will be small due to a limited number of affected consumers, Hay explained.

"One of the ironies was that, although Medco ships a lot of drugs from Nevada, only a few hundred (effected) Nevada customers were identified," he said. Hay added that any harm to those customers was minimal.

Medco employs more than 1,000 local workers at an automated dispensing pharmacy in Las Vegas and a call center in Henderson.

In the settlement, Medco Health Solutions Inc. will also be required to make a number of disclosures to prescribers and patients. Those include the minimum or actual cost savings for health plans and the difference in a patient's co-payment, the difference in side effects between prescribed and proposed medications, and Medco's financial incentives for certain drug switches.

The agreement does not include an admission or finding of inappropriate business conduct by the Franklin Lakes, N.J.-based company.

Medco, like other pharmacy benefits managers, contracts with health plans to process prescription drug payments to pharmacies for medications provided to patients enrolled in the health plans.

In addition to Nevada, the settlement was spearheaded by authorities in Pennsylvania, Massachusetts and Maine, and includes Arizona, California, Connecticut, Delaware, Florida, Illinois, Iowa, Louisiana, Maryland, New York, North Carolina, Oregon, Texas, Vermont, Virginia and Washington.

"Consumers and their doctors should make the decision of switching from one medication to another based on the best interests of the patient, not because a (pharmacy benefits manager) has found a way to make money," Pennsylvania Attorney General Jerry Pappert said in a statement.

A separate pending federal suit claims Medco ignored safety rules at its mail-order drug centers and pressured doctors to switch patients to medications made by its former owner, pharmaceutical giant Merck & Co.

Medco officials have called those charges either false or overstated.

In trading today, Medco shares were up $1.17 at $36.20 on the New York Stock Exchange.