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Court battle rages on over pharmacy benefit manager secrets

March 10, 2019

The court battle to keep secret much of the information in a state report that is unflattering to two pharmacy middlemen continues to rage.

In a flurry of court filings during the past few weeks, lawyers for the Ohio Department of Medicaid have accused pharmacy giant CVS of burying it and its analyst with demands for irrelevant information. The filings come after OptumRx, the other large pharmacy benefit manager serving Ohio Medicaid, put people under oath — in part to ask who shared information with The Dispatch.

Among the things that CVS is demanding in the case: transcripts of all depositions and testimony given in the past 10 years by any expert the Medicaid Department might call to testify in the trial, which is scheduled in less than two months. CVS also demanded that Medicaid produce all communications the department has had with CVS since the beginning of last year about PBM contracts and pharmacy reimbursement data.

Over and over, the state's lawyers have objected to CVS' requests, saying that the information it's seeking is "unduly burdensome," and "is neither admissible at trial nor is calculated to lead to the discovery of admissible evidence."

In a Feb. 26 letter to CVS, Assistant Attorney General Julie Brigner said, "only two of (CVS') 22 requests seek documents regarding the report" the pharmacy benefit managers are trying to keep secret.

Medicaid hired HealthPlan Data Solutions to prepare that report. It found that CVS and OptumRx charged taxpayers $224 million more in a year than they paid pharmacies for the drugs dispensed to Medicaid patients. The report said that was three to six times the going rate to administer the $2.5 billion spent on drugs through Medicaid managed-care programs.

For its part, CVS contends that the Medicaid Department is dragging its feet in producing documents and other information in the lead-up to the trial in Franklin County Common Pleas Court, which is scheduled for April 29. Asked about the state's accusations that CVS' requests for information from the Medicaid Department and HealthPlan Data Solutions were overly broad, CVS spokesman T.J. Crawford didn't respond directly.

"While The Dispatch regularly cites HDS in its blatant anti-PBM coverage, it has never pointed out the direct ties between HDS and the Ohio Pharmacists Association (OPA), and the clear conflict of interest that relationship creates," he said in an email. "OPA members make more money from Medicaid patients when their rates are not subject to negotiations with PBMs. That’s great for independent pharmacists and drug manufacturers, but taxpayers and patients end up paying the price."

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Crawford didn't respond when asked what the "direct ties" between the pharmacists' group and HDS are, nor did he answer when asked whether he thought HDS' report was inaccurate. The head of HDS, who is a pharmacist, is a former member of the state group.

CVS has not disputed the accuracy of the report, which it praised when the report was finalized in June. The company has touted the report's findings that CVS' pharmacy benefit manager reimbursed independent pharmacists more than its own pharmacies and that the report found that by using managed care, taxpayers saved $145 million over a straight fee-for-service model.

But by calling them trade secrets, CVS is fighting to keep other information hidden. For example, behind the redactions are details showing that the CVS PBM would have had to reimburse Walmart and Sam's Club pharmacies 45 percent more if it were to match what it paid CVS pharmacies, The Dispatch reported earlier this year.

After OptumRx — which didn't comment for this story — said it would question HealthPlan officials about their communications with The Dispatch, CVS served a subpoena Feb. 21 on the small consulting firm.

In seeking to quash the subpoena, the Medicaid Department called it a "grossly overreaching" attempt to "attack HDS's methodology, the substance of the report and the analysis underlying the report." Medicaid also accused CVS of "trying to use its subpoena to learn if HDS has been engaged by any other state agency to conduct any type of analysis."

Before it did its analysis for Medicaid, HDS did another for the Ohio Bureau of Workers' Compensation that determined OptumRx overcharged that agency. Ohio Attorney General Dave Yost announced last month that he's now seeking to recover $16 million from the company on behalf of the bureau.

Asked for comment, HDS suggested that it wants to stay out of the legal line of fire.

“HealthPlan Data Solutions is committed to providing data through advanced analytics that give our clients a transparent and simplified way to evaluate how they’re spending money on health care and prescription drugs," spokesman Ryan Stubenrauch said in an email. "We would prefer to spend more time on that mission and less time in court, but we will continue to abide by any and all orders from the court.”