'Free' pain cream costs city more than $8,000 a prescription
Armed with prescription forms and a deceptive pitch, the pharmacy reps walked into a handful of Columbus police and fire stations.
The sales line went something like this: Here is a new topical cream that will ease your aches and pains. It also will improve your skin and even help eliminate stretch marks.
The cops and firefighters were told to try it, and handed a prescription form they could give to their doctor.
"It’s of no cost to you," was how the pitch ended.
What was not mentioned was that the cream — a compound drug that included little more than lotion and resveratrol, an inexpensive, nonprescriptive supplement derived from red-wine grapes — was being billed to the city’s health-care provider at more than $8,000 per prescription, according to documents provided by the city.
From February to June 2015, city employees submitted 283 prescriptions for the cream for a total of $2.3 million, city records show. That’s about $8,100 per prescription.
A 60-dose bottle of 500-milligram resveratrol capsules can be bought at a typical nutritional supplements store for about $60.
And although city employees indeed paid nothing out-of-pocket for the cream, they — and taxpayers — were hit with the largest health-care premium increase in more than a decade in 2016. Taxpayers funded $177.2 million, or 88 percent, of the health-care package that year. City employees paid the remaining 12 percent.
The city contracts with a pharmacy benefit manager that is supposed to monitor and curtail such drug costs. The contract calls for monthly and quarterly monitoring of such prescriptions.
But it’s unclear why officials from Catamaran, the city’s pharmacy benefit manager at the time, didn’t catch the scheme. Catamaran was in the process of being bought by OptumRx, one of the country’s three largest pharmacy benefit managers, or PBMs.
"We did notice the costs, and we did reach out to the city, but we couldn’t implement changes immediately the way their contract was designed," said Drew Krejci, Optum’s spokesman.
Krejci said that because the city has to negotiate such changes through its unions, it took months to stop the sale of the cream to city workers.
Pharmacy benefit managers have come under increased scrutiny across the country because of rising prescription drug costs and the business model under which they operate. PBMs negotiate drug prices with manufacturers and pharmacies.
Critics, including some pharmacists in Ohio, have said that the PBMs set the prices and get rebates on drugs but don't pass those savings on to the public.
They have been called the middlemen of prescription drugs.
President Donald Trump and several Ohio legislators have expressed concerns that PBMs don’t satisfy their mission of reducing prescription drug costs.
The increases in the city’s health care costs largely have been attributed to rising prescription drug prices.
In 2010, the city spent $24.7 million on prescription drugs. Last year, the total spent was $43.5 million.
That’s a 76 percent increase.
The city’s workforce has increased by about 5 percent, or 340 people, during that time, according to budget documents.
The most significant increase came during the three years that the city contracted with Catamaran/Optum Rx. The city went from spending $34 million on prescription drugs in 2014 to $48.1 million, $41.3 million and $43.5 million over the next three years.
Columbus is using Optum Rx again this year, at a cost of $50.2 million.
Optum Rx is a PBM owned by UnitedHealthcare Insurance, which also is the provider of insurance to city employees.
Why the pain cream salesman picked Columbus isn’t clear. But city officials believe that word somehow got out about a loophole regarding "compound drugs" — a drug formed by blending at least two other drugs — in the city's contract with Catamaran/Optum Rx. Less than two months after the city inked the deal, the cream prescriptions started, according to city records.
That loophole allowed compound prescription drugs to be filled without prior approval from UnitedHealthcare.
From February to June 2015, $6 million in compound drug prescriptions were billed to the city’s health care provider. Records provided to union officials show the city’s average quarterly costs for compound drugs had been less than $100,000.
"I am outraged that our employees may be falling prey to predatory doctors and pharmacies who abuse the system," then-Mayor Michael B. Coleman wrote in a memo to his human resources director in August 2015.
Coleman called for an investigation. He demanded that the doctors who offered prescriptions without proper examinations, and the pharmacists involved, be removed from the health care plan and be prosecuted.
Coleman also demanded more regular meetings with the PBM.
But there was no investigation, said Columbus Human Resources Director Nichole Brandon. And no doctors were identified or removed from UnitedHealthcare’s plan as a result.
"We asked our vendor (Catamaran) to look into the issue, and they were able to pinpoint the fact that compound drugs were contributing to the spike in costs at that time," Brandon wrote in an email to The Dispatch.
The city attorney’s office also looked into the issue and determined there was nothing illegal, according to an email from its spokeswoman.
A pharmacy called Topical Rx Pharmacy in Tallahassee, Florida, and doctors in UnitedHealthcare’s network prescribed the compound pain cream.
Topical Rx was registered as a limited liability corporation in Florida from 2012 to 2017 before it was dissolved, according to the Florida Department of State's business registry. The pharmacy closed, according to the state's pharmacy board database.
Bobby M. Vickers Jr., who couldn't be reached for comment, was listed as a managing partner. The doctors involved in prescribing the drugs were never identified by the city.
"I believe it to be theft from the taxpayers and from city employees," said Jason Pappas, head of the police union that negotiates health care plans with the city. "It’s hideous and should be looked at as a criminal case."
Dave Montgomery, president of the firefighters union, said at "the very least," the doctors involved should have been removed from the health care network.
"We were extremely disappointed that these individuals were not held accountable ... they permitted the city’s taxpayers and its firefighters, police officers and all other city employees to be bilked out of millions of dollars," he said.
Brandon said that Optum removed the pharmacy involved in the pain cream scheme from the city’s health care network.
"We don’t have any control over the doctors in the system," said Krejci, Optum’s spokesman. "We control the pharmacies that we approve."
Brandon said the city has corralled the compound-drug issue. The city’s PBM has banned compound drugs that are not approved by the FDA or have questionable benefits.
Any compound drug costing more than $300 now has to receive prior approval before being dispensed. And employees are limited to one compound-drug claim per month, Brandon said.
She said the city now spends less than $20,000 a quarter on compound drugs.
But Pappas and Montgomery said the city achieved that by forcing city employees to go through a preapproval process before getting compound drugs.
"Instead of holding the PBM accountable, or asking that these doctors who stole money from taxpayers leave the system, it was pushed back onto employees," Montgomery said.