JURY SLAMS MEDCO WITH $7.8-MILLION FRAUD VERDICT

In a key legal blow to the pharmacybenefit management (PBM) industry, ajury in Ohio ruled that PBM giant MedcoHealth Solutions must pay $7.8 million tothe State Teachers Retirement System ofOhio because of fraudulent activities. Theverdict came in response to allegationsthat Medco overcharged the retiredteachers for generic drugs and illegallyfailed to pass on rebates received frompharmaceutical manufacturers.

In addition to pocketing secret drugmanufacturer rebates, the complaintcharged that Medco used secret paymentsto manipulatethe company's formularycommittee. The PBMalso was accused of switching patientsto a Medco mail-order pharmacy andthen charging them more for genericdrugs than they would have paid at communitypharmacies.

Prosecutors in Ohio said the verdictrepresents the first time that a US juryhas recognized that a company managingpharmacy benefits has a legal duty toact in the best interest of retirees andpensioners.