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Ohio attorney general Dave Yost takes pharmacy benefit manager OptumRx to court

March 18, 2019

Ohio Attorney General Dave Yost is suing pharmacy middleman OptumRx to recover $16 million in overcharges to the state for prescription drugs.

In a lawsuit filed in Franklin County Common Pleas Court on Friday, Yost demanded repayment after first seeking mediation in the dispute on behalf of the Bureau of Workers' Compensation, which hired OptumRx to manage pharmacy benefits for injured workers.

"It’s been 30 days, and we only just now have a meeting scheduled to talk," Yost said. "Time's up; give us our money."

As required under the bureau's contract with OptumRx, the state first sought unbinding mediation with the company.

According to the attorney general, the overcharges stem from OptumRX's failure to adhere to agreed-upon discounts on generic drugs for nearly three years, as required under the company's contract with the state agency.

In a 15-page complaint, Yost seeks a total of $30 million in compensatory and punitive damages, claiming OptumRX breached its contract with the bureau and committed fraud. OptumRX allegedly increased prices for the bureau’s “commonly utilized” drugs “without explanation.”

The bureau “learned the sudden price increases were actually part of (OptumRX;s) strategy to subsidize lower prices charged to its other clients,” Yost said. “By charging higher prices to (the bureau, OptumRX) could provide larger discounts to other clients.”

OptumRx officials dispute Yost's claims.

“We are honored to have delivered access to more affordable prescription medications for the Ohio Bureau of Workers’ Compensation and Ohio taxpayers. We believe these allegations are without merit and are working with the state to resolve the bureau’s concerns in accordance with the terms of our contract," said OptumRx spokesman Drew Krejci.

The lawsuit is part of a broader state investigation into pharmacy benefit managers hired by the bureau and Department of Medicaid to negotiate prices with drug manufacturers and reimburse pharmacists for filling prescriptions.

"Our review of PBM practices throughout state government is still ongoing," Yost said. "These are the first raindrops, but there’s a storm a-comin'."

OptumRx also is the pharmacy benefit manager for one of Ohio's five Medicaid managed-care plans. CVS Caremark is PBM to the four other companies. Together, the companies administer $2.5 billion in annual Medicaid drug spending.

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Gov. Mike DeWine recently ordered Medicaid officials to rebid the state's managed-care contracts to address concerns about PBM pricing and a lack of transparency regarding their rates, rebates they negotiate with drug companies and other fees.

"Attorney General Yost and his litigation team have continued working on investigating PBM contracts in Ohio and, through this lawsuit, are alleging the state was charged more than contractually allowed," DeWine said. "My administration will continue to provide any information, documents, and data the Attorney General needs in his continued investigation of PBMs."

PBM practices in Ohio and other states have been under increased scrutiny after revelations that some PBMs have been charging states far more for drug prescriptions than the rates they were paying pharmacists to fill the prescriptions.

Yost contends that OptumRx overcharged the bureau $15.8 million for generic drugs bought between Jan. 1, 2015, and Oct. 27, 2018, when its contract ended and the bureau hired a different company to oversee its drug program. The bureau spends about $86 million a year on prescription drugs.

An analysis commissioned by the bureau and conducted by HealthPlan Data Solutions revealed the overcharges.

A subsequent study by the same firm for the Department of Medicaid found that OptumRx and CVS Caremark charged the state $224 million more a year for drugs than they were reimbursing pharmacies; that money was generated by the PBMs charging Ohio three to six times the going industry rate.