/publications/issue/2004/2004-05/2004-05-7854

PBM Settles Cases with States

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The nation's largest pharmacy benefits manager will pay $29 million to settle a dispute with 20 states over unfair business practices. The states claimed that Medco Health Solutions Inc pressured physicians to switch patients' medications to suit its bottom line.

As part of the deal, Medco did not admit any wrongdoing. Under the settlement with the states, Medco will pay them a total of $20.2 million, with each state getting approximately $1 million, based on its population. Medco also agreed to pay $6.6 million in litigation costs.

Under the terms of new disclosures, Medco will call patients first and send a follow-up letter explaining why the drug switch was made. Also, Medco must disclose the cost saving for health plans and the differences in a patient's copayment, as well as the different side effects of the prescribed and the proposed medications.