PBM Lawsuit Against FTC Signals Growing Battle To Rein In PBMs

September 17, 2024

Employers, health plan sponsors and fiduciaries, health care providers and individuals concerned about prescription drug prices and access should carefully follow the rapidly accelerating battle between the Federal Trade Commission (“FTC”) and pharmacy benefit managers (“PBMs”), which threatens to reshape how pharmaceutical products are priced and sold to health plans and consumers.

At the center of the complex pharmaceutical distribution chain that delivers prescription medicines from manufacturers to patients, PBMs generally are vertically integrated organizations that simultaneously serve and regulate health plans and pharmacists and play other roles in the drug supply chain.

This vertical integration allows these six PBMs to wield enormous power and influence over health plans’ and patients’ access to drugs and the prices they pay, as well as pharmacies’ access to prescription drugs and the price and other terms under which pharmacies qualify for health plan coverage or payment for these medications.

PBMs also exert substantial influence over independent pharmacies by imposing contractual terms imposed by PBMs as a condition of accessing medications, covering the pharmacies under health plans contracted with the PBMs, or both.

Mergers and consolidations within the PBM, pharmacy and health benefit industries that brought ownership of the largest PBMs under common ownership with large insurers and retail pharmacies they purport to both manage and work has increased the already significant power of PBMs to use their integration to control these and other aspects of prescription drug availability, access, distribution, and pricing/ Consequently, the sixth largest PMBs -Caremark Rx, LLC; Express Scripts, Inc.; OptumRx, Inc.; Humana Pharmacy Solutions, Inc.; Prime Therapeutics LLC; and MedImpact Healthcare Systems, Inc. – now collectively negotiate and enforce access, coverage, pricing and other key terms and conditions governing the availability, access to, and cost of prescription drugs for hundreds of millions of Americans.

With the consolidation of ownership of large PBMs, payers and pharmacies further tightening these PBMs’ control over prescription drug distribution, pricing, and coverage and prescription drug costs continuing to rise, PBMs and their practices increasingly face scrutiny, challenges and calls for reform by employers and other plan sponsors, health care providers, independent pharmacies, the FTC and other regulators, Congress, state legislatures and regulators, consumers, and others. See Report on Pharmacy Benefit Managers: The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies.

FTC July 2024 Interim Report On 6th Largest PBMS

In response to these and other growing concerns about consolidation, lack of transparency and other potential abuses about the PBM industry and prescription drug costs, the FTC began investigating the PBM industry in 2022.  In July 2024, the FTC released its Report on Pharmacy Benefit Managers: The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies (the “FTC Report”) that reports the FTC’s interim findings from its ongoing study of the six largest PBMs – Caremark Rx, LLC; Express Scripts, Inc.; OptumRx, Inc.; Humana Pharmacy Solutions, Inc.; Prime Therapeutics LLC; and MedImpact Healthcare Systems, Inc. use their vertical integration and concentration to inflate drug costs, squeeze Main Street pharmacies and engage in other practices harmful to patients and independent pharmacies.

The FTC Report shares interim findings based on the FTC staff’s review of more than 1,200 public comments to identify predominant areas of concern, initial submissions of internal documents and data from PBM respondents and their affiliates, interviews of various industry experts and participants and review of other public data and information.  The FTC Report also discloses that certain PBMS have yet to produce the data and documents required in response to FTC orders issued more than two years ago. While stating its study continues and promising that the FTC will continue efforts to force the PBMs to produce the evidence demanded in the orders, the FTC Report also promises to share regular updates about its progress and findings.

While the investigation continues, the FTC Report shares the FTC’s interim findings that:

  • The market for pharmacy benefit management services has become highly concentrated, and the largest PBMs are now also vertically integrated with the nation’s largest health insurers and specialty and retail pharmacies;
  • As a result of this high degree of consolidation and vertical integration, the leading PBMs can now exercise significant power over Americans’ access to drugs and the prices they pay;
  • Vertically integrated PBMs may have the ability and incentive to prefer their own affiliated businesses, which in turn can disadvantage unaffiliated pharmacies and increase prescription drug costs;
  • Evidence suggests that increased concentration may give the leading PBMs the leverage to enter into complex and opaque contractual relationships that may disadvantage smaller, unaffiliated pharmacies and the patients they serve;
  • PBMs and brand drug manufacturers sometimes negotiate prescription drug rebates that are expressly conditioned on limiting access to potentially lower cost generic alternatives in exchange for higher rebates from the manufactures in a manner that may cut off patient access to lower-cost medicines and warrant further scrutiny by the Commission, policymakers, and industry stakeholders.

The FTC Report also shares the FTC’s concern that the six largest PBMs improperly use their integration and market control over 95 percent of all prescriptions filled in the United States:

  • To profit at the expense of patients and independent pharmacists;
  • To hike the cost of and overcharge for drugs
  • To squeeze independent pharmacies that many Americans—especially those in rural communities—depend on for essential care;
  • To wield enormous power over patients’ ability to access and afford their prescription drugs, allowing PBMs to significantly influence what drugs are available and at what price; and
  • To impose unfair, arbitrary, and harmful contractual terms that can impact independent pharmacies’ ability to stay in business and serve their communities.

The FTC Report concludes that PBMs’ have an “outsized influence” that comes not only from the expansion of their traditional, middlemen administrative services in processing patients’ pharmacy prescription claims but also from decades of consolidation and vertical integration across the healthcare delivery system where “the largest PBMs have come under common ownership with the largest, most dominant health insurers … [that] operate some of the largest retail, mail order, and specialty pharmacies in the country, which compete with local independent pharmacies. Given these relationships, PBMs and their affiliated entities may have the incentive and ability to engage in steering a growing share of prescription revenues to their own pharmacies through specialty drug classification, self-preferential pricing, and pharmacy contracting procedures to target and control the business operations of pharmacies. While the FTC Report principally focuses on the impact of these changing market dynamics on the operation and vitality of the nation’s pharmacies, the FTC Report also states that initial evidence about PBM and brand pharmaceutical rebating practices “urgently warrant further scrutiny and potential regulation.”

The FTC Report concludes that these interim findings underscore the importance and urgency of scrutinizing the role and influence of PBMs in the nation’s healthcare system, particularly as federal and state governments are the largest purchasers of healthcare.

Express Scripts Sues FTC Demanding Retraction Of FTC Report

Not surprisingly, the PBMs subject to the FTC Report generally have protested the reported findings. On September 17, 2024, CIGNA-owned Express Scripts sued the FTC, demanding the FTC retraction of the FTC Report. In the Express Scripts, Inc. v. FTC complaint, Express Scripts characterizes the FTC Report as “unfair, biased, erroneous, and defamatory.” In the Complaint, Express Scripts alleges:

“According to the Commission’s press release announcing the Report, the Report stems from special orders issued under Section 6(b) of the FTC Act to six PBMs, including Express Scripts, demanding data and information about the PBM industry. But the Report is not an analysis of the data and information produced by the PBMs. Instead, it is seventy-four pages of unsupported innuendo leveled against Express Scripts and other PBMs under a false and defamatory headline and accompanied by a false and defamatory press release. The Commission disregarded the millions of documents and terabytes of data produced and relied instead on unverified comments from the very companies that PBMs negotiate against in order to help lower drug costs. Not surprisingly, those entities are incentivized to point the finger at PBMs for allegedly driving drug costs up, when it is PBMs who are, in fact, bringing drug costs down.”

Charging that the FTC Report “followed prejudice and politics, not evidence or sound economics, and wrongly concluded that PBMs inflate drug costs and harm independent pharmacies” and harmed Express Scripts’ business and reputation by the FTC’s “unlawful, unconstitutional, and arbitrary and capricious conduct and defamatory statements,” the Complaint alleges that the FTC Report “gets nearly everything wrong” as a result of FTC Chair Khan’s and the FTC’s bias against PBMs and failure to consider the evidence before them. For example, the Complaint asserts:

“It falsely accuses Express Scripts and other PBMs of “controlling” access to drugs and drug pricing when it is manufacturers who set drug prices and plan sponsors who decide which drugs to cover for their members.

It attacks Express Scripts for disadvantaging independent pharmacies when the evidence produced shows that on average independent pharmacies not affiliated with PBMs receive higher reimbursements than unaffiliated chain pharmacies, independent pharmacies are profitable, and the number of prescriptions filled at independent pharmacies is increasing.

It falsely claims that Express Scripts is “profiting by inflating drug costs,” including by taking rebates from drug manufacturers in return for putting high cost drugs on formularies when, in truth, the bulk of rebates and fees received by PBMs get passed through to plan sponsors and lower the net cost of drugs to plan sponsors and members. Moreover, Express Scripts prefers drugs with the lowest net cost to its plan sponsors on its largest standard formularies.

It makes the broad-brush claim that the PBMs failed to comply with the Commission’s 2022 6(b) orders, which demanded extensive data and information for production—without identifying who the supposed offenders are—even while Express Scripts had long ago complied with the Commission’s requests, which

the Commission knew and verbally acknowledged before and after issuing its Report. It falsely states that PBMs, including Express Scripts, “profit at the expense of patients by inflating drug costs” when the evidence shows that PBMs compete for the business of plan sponsors by offering lower costs for covered drugs than their competitors. PBMs have low and declining operating margins and any PBM that sought to inflate the cost of covered drugs would quickly lose its clients.

Due to these alleged false conclusions, the Complaint charges that the FTC Report violates federal and state law several times over, including in at least the following ways:

  • By exhibiting bias against PBMs and prejudgment of the facts, the Report violates Express Scripts’ right to due process under the Fifth Amendment to the U.S. Constitution.
  • It contains (i) assertions that will predictably be and have been interpreted as conclusions adverse to all PBMs and (ii) false statements unsupported by the record that demonstrate the Commission’s failure to consider the available contrary evidence and render its decision arbitrary and capricious.
  • It is not in the public interest and therefore exceeds the Commission’s statutory authority under Section 6(f) of the FTC Act.
  • It is unlawful because Commissioners exercise executive authority while enjoying statutory removal protections in violation of Article II of the U.S. Constitution.
  • And the Commission’s claim both in the Report and the accompanying press release that PBMs, including Express Scripts, are “inflating drug costs” and “profit by inflating drug costs at the expense of patients,” is false and defamatory.

Claiming that Express Scripts has suffered and continues to financial, business and reputational harm by the FTC Report’s allegedly false statements about its business practices and the insinuation that Express Scripts’ successful efforts to fight for lower prices for plan including being sued in multiple lawsuits invoking the FTC Report as evidentiary support for plaintiffs’ claims and faces multiple demands for information from state regulators and federal legislative committees. Contending these harms “have only just begun and will only be compounded over time,” Express Scripts asks the District Court:

  • To vacate and require the FTC to set aside the FTC Report;
  • Make the FTC correct the false statements it has made about PBMs; and
  • Require the recusal of FTC Chair Khan from further FTC proceedings regarding Express Scripts in light of her evident bias against PBMs, including Express Scripts.

Regardless of how the Express Scripts lawsuit plays out, employers and other health plan sponsors, fiduciaries, third party administrators, insurers, pharmacies, health care providers and individual Americans can expect to see continued challenges and attempts to reform PBMs to address perceived abuses. The direction and specifics of those challenges and changes remain unclear. Since political pressure is likely to significantly influence the ultimate outcome of any reforms, concerned individuals and organizations should carefully monitor and provide input.

Meanwhile, employer and other health plan sponsors and fiduciaries should also anticipate that the FTC Report and similar Congressional and other studies and investigations may increasingly fuel and provide evidence to support participants’ and beneficiaries’ questions and challenges to PBM features and practices within their health plans.

More Information

We hope this update is helpful. For more information about the  or other health or other employee benefits, human resources, or health care developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.

Solutions Law Press, Inc. invites you receive future updates by registering on our Solutions Law Press, Inc. Website and participating and contributing to the discussions in our Solutions Law Press, Inc. LinkedIn SLP Health Care Risk Management & Operations Group, HR & Benefits Update Compliance Group, and/or Coalition for Responsible Health Care Policy.

About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for her more than 35 years of health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications including leading edge work on PBM, pharmacy and pharmaceutical and other health care, managed care, insurance, and insured and self-insured contracting, design, administration and regulation.

Author of numerous highly regarded works on PBM and other health plan contracting and design,  Immediate Past Chair of the ABA International Section Life Sciences Committee and the Tort Trial and Insurance Practice Section Medicine and Law Committee, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and past Group Chair and current Welfare Benefit Committee Co-Chair of the ABA RPTE Employee Benefits & Other Compensation Group, Ms. Stamer is most widely recognized for her decades of pragmatic, leading edge work, scholarship and thought leadership on health and other privacy and data security and other health industry legal, public policy and operational concerns. 

Ms. Stamer’s work throughout her career has focused heavily on working with health care and managed care, health and other employee benefit plan, insurance and financial services, data and technology and many other other public and private organizations and their technology, data, and other service providers and advisors domestically and internationally with legal and operational compliance and risk management, performance and workforce management, regulatory and public policy and other legal and operational concerns.  As a part of this work, she has continuously and extensively worked with domestic and international health plans, their sponsors, fiduciaries, administrators, and insurers; managed care and insurance organizations; third party administrators and other health benefit service providers; hospitals, health care systems and other health care providers, accreditation, peer review and quality committees and organizations; billing, utilization management, management services organizations, group purchasing organizations; pharmaceutical, pharmacy, and prescription benefit management and organizations; consultants; investors; EMR, claims, payroll and other technology, billing and reimbursement and other services and product vendors; products and solutions consultants and developers; investors; managed care organizations, self-insured health and other employee benefit plans, their sponsors, fiduciaries, administrators and service providers, insurers and other payers, health industry advocacy and other service providers and groups and other health and managed care industry clients as well as federal and state legislative, regulatory, investigatory and enforcement bodies and agencies.

She also has extensive experience helping health care systems and organizations, group and individual health care providers, health plans and insurers, health IT, life sciences and other health industry clients prevent, investigate, manage and resolve  sexual assault, abuse, harassment and other organizational, provider and employee misconduct and other performance and behavior; manage Section 1557, Civil Rights Act and other discrimination and accommodation, and other regulatory, contractual and other compliance; vendors and suppliers; contracting and other terms of participation, medical billing, reimbursement, claims administration and coordination, Medicare, Medicaid, CHIP, Medicare/Medicaid Advantage, ERISA and other payers and other provider-payer relations, contracting, compliance and enforcement; Form 990 and other nonprofit and tax-exemption; fundraising, investors, joint venture, and other business partners; quality and other performance measurement, management, discipline and reporting; physician and other workforce recruiting, performance management, peer review and other investigations and discipline, wage and hour, payroll, gain-sharing and other pay-for performance and other compensation, training, outsourcing and other human resources and workforce matters; board, medical staff and other governance; strategic planning, process and quality improvement; meaningful use, EMR, HIPAA and other technology,  data security and breach and other health IT and data; STARK, ant kickback, insurance, and other fraud prevention, investigation, defense and enforcement; audits, investigations, and enforcement actions; trade secrets and other intellectual property; crisis preparedness and response; internal, government and third-party licensure, credentialing, accreditation, HCQIA and other peer review and quality reporting, audits, investigations, enforcement and defense; patient relations and care;  internal controls and regulatory compliance; payer-provider, provider-provider, vendor, patient, governmental and community relations; facilities, practice, products and other sales, mergers, acquisitions and other business and commercial transactions; government procurement and contracting; grants; tax-exemption and not-for-profit; privacy and data security; training; risk and change management; regulatory affairs and public policy; process, product and service improvement, development and innovation, and other legal and operational compliance and risk management, government and regulatory affairs and operations concerns. to establish, administer and defend workforce and staffing, quality, and other compliance, risk management and operational practices, policies and actions; comply with requirements; investigate and respond to Board of Medicine, Health, Nursing, Pharmacy, Chiropractic, and other licensing agencies, Department of Aging & Disability, FDA, Drug Enforcement Agency, OCR Privacy and Civil Rights, Department of Labor, IRS, HHS, DOD, FTC, SEC, CDC and other public health, Department of Justice and state attorneys’ general and other federal and state agencies; JCHO and other accreditation and quality organizations; private litigation and other federal and state health care industry actions: regulatory and public policy advocacy; training and discipline; enforcement;  and other strategic and operational concerns.

Author of publications on “Transparent PBM Contracting,” “ACOs, Direct Contracting: Legal & Practical Challenges For Employers, Providers & TPAs,” “The Medicare Advantage Contracting Manual,” “Third Party Administrator (TPA) Contracting Principles and Strategies and a multitude of other highly regarded publications and presentations,  Stamer is widely recognized for her thought leadership on PBM and other managed care and health plan contracting and design, and a multitude of other health care, health plan and other health industry matters.  In addition, Ms. Stamer contributes her time and leadership to numerous policy, professional, civil and other organizations including service as the, the American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting and a former Council Representative, Past Chair of the ABA Managed Care & Insurance Interest Group, former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her extensive publications and thought leadership as well as leadership involvement in a broad range of other professional and civic organizations. For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

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DOJ Omnicare/CVS Suit Highlights Potential Pharmacy Benefit Claims Abuse Exposure For Health Plans, Member Safety Risk

December 18, 2019

A civil health care fraud lawsuit filed by the Department of Justice (“DOJ”) in the U.S. District Court for the Southern District of New York today (December 17, 2019) against the nation’s largest long term care pharmacy provider, Omnicare, and its parent, CVS Healthcare Corporation may signal the advisability for insurers, fiduciaries, administrators and sponsors of insured and self-insured health and other benefit plans providing pharmacy benefits to tighten claims and audit past claims payments for prescription drug claims submitted by Omnicare and other CVS pharmacy providers as well as other pharmacy claims to the pharmacy possessed a valid, current prescription to dispense the drug.

Omnicare Complaint Highlights Potential Prescription Drug Fraud By Billing For Filling Expired Prescriptions

In its U.S. ex rel Bassan complaint in intervention (Omnicare and CVS) complaint DOJ joined by 29 states and the District of Colombia filed suit against Omnicare, and its parent company, CVS Healthcare Corporation for damages and civil penalties under the False Claims Act for fraudulently billing federal healthcare programs for hundreds of thousands of non-controlled prescription drugs that DOJ claims Omnicare illegally dispensed to elderly and disabled individuals in assisted living facilities, group homes, independent living communities, and other non-skilled residential long-term care facilities (“LTC facilities”) without a valid, current prescription..  The States of California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Rhode Island, Tennessee, Texas, Vermont, Virginia, Washington, Wisconsin, and the District Of Columbia are joining the DOJ in the complaint as co-plaintiffs.

Omnicare is the country’s largest provider of pharmacy services to LTC facilities.  It currently operates approximately 160 pharmacies in 47 states across the United States, which dispense tens of millions of prescription drugs to LTC facilities that serve elderly and disabled individuals.  CVS acquired Omnicare in May 2015, and shortly thereafter assumed an active role in overseeing Omnicare’s operations, including pharmacy dispensing practices and systems.

The DOJ complaint in the Federal District Court in Manhattan, New York charges that Omnicare illegally dispensed and billed the federal government and patients for antipsychotics, anticonvulsants, and antidepressants Omnicare dispensed to elderly and disabled residents in LTC facilities without proper prescriptions.   According to the DOJ complaint from 2010 until 2018, Omnicare and CVS allowed Omnicare pharmacies to dispense non-controlled prescription drugs to tens of thousands of elderly and disabled individuals living in LTC facilities based on prescriptions that had expired, were out of refills, or were otherwise invalid.  Omnicare repeatedly disregarded prescription refill limitations and expiration dates that required doctor visits to reevaluate whether the drug should be renewed.  Instead of requesting new prescriptions when old ones expired, Omnicare allowed prescriptions to “roll over.”  At Omnicare, “rolling over” a prescription meant that when a prescription expired, Omnicare’s computer systems would assign the old prescription a new number and the pharmacy would continue to dispense the drug indefinitely without the need for a prescription renewal.  Depending on the computer system used, DOJ claims Omnicare also sometimes assigned a fake number of authorized refills to a prescription – usually 99 allowable refills for Medicare patients – to allow for continuous refilling.  DOJ claims that Omnicare pharmacies “rolled over” prescriptions for elderly and disabled individuals living in more than 3,000 residential long-term care facilities, including assisted living facilities operated by the largest long-term care providers in the country, such as Brookdale Senior Living, Atria Senior Living, Sunrise Senior Living Services, and Five Star Senior Living. DOJ charges that Omnicare used these practices to refill prescriptions for patients after the required prescription for refill expired for months, and sometimes years, after the prescriptions expired.   The complaint alleged that Omnicare internally referred to these renumbered expired prescriptions as “rollover” prescriptions.

Many of the prescription drugs dispensed by Omnicare without valid prescriptions treat serious, chronic conditions, such as dementia, depression, and heart disease.  They include antipsychotics, anticonvulsants, cardiovascular medications, anti-depressants, and other drugs that can have dangerous side effects and need to be closely monitored by doctors, particularly when taken in combination with other drugs by elderly patients.

DOJ says these Omnicare practices of illegally dispensing drugs to elderly and disabled individuals living in LTC facilities exposed these vulnerable individuals to a significant risk of harm.  In contrast to traditional skilled nursing homes, where residents have access to 24-hour medical care supervised by doctors, assisted living and other non-skilled residential facilities offer more limited medical care, or none at all.  In particular, these LTC facilities generally do not have doctors on staff to oversee and monitor residents’ drug therapy.  By repeatedly dispensing potent drugs without current and valid prescriptions, Omnicare jeopardized the health and safety of tens of thousands of individuals who continued to take the same drugs for months, and sometimes years, without consulting their doctors to determine whether the medications were still clinically appropriate.

A large percentage of the long-term care residents served by Omnicare are beneficiaries of federal healthcare programs. The complaint charges that along with illegally filling the expired prescriptions, Omnicare knowingly transmitted false information to these federal healthcare programs that made it appear that drug dispensations were supported by current, valid prescriptions from physicians when in fact they were not.   By dispensing drugs without valid prescriptions, Omnicare presented, or caused to be presented, hundreds of thousands of false claims to Medicare, Medicaid, and TRICARE that were ineligible for payment in violation of the False Claims Act.  In fact, the complaint charges that Omnicare managers exerted pressure on overwhelmed pharmacy staff to fill prescriptions quickly so that Omnicare could submit claims and collect payments on these rollover claims.

Moreover, DOJ says that it possesses evidence that senior management at Omnicare and CVS knew of the practices.  The DOJ complaint charges among other things that the Omnicare’s Compliance Department succinctly acknowledged the problem in an internal April 2015 email in which one Regional Compliance Officer stated:  “An issue that I am running into more and more in multiple states concerns the ability of our systems to allow prescriptions to continue to roll after a year to a new prescription number without any documentation or pharmacist intervention.”  A compliance officer then forwarded the email to the head of Omnicare’s Third Party Audit group, who responded that she had a “potential solution (programmed last year) but no one is rolling it out now.”

In today’s announcement of the lawsuit, Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, Omnicare put at risk the health of tens of thousands of elderly and disabled individuals living in assisted living and other residential long-term care facilities by dispensing drugs for months, and sometimes years, without obtaining current, valid prescriptions from doctors.  A pharmacy’s fundamental obligation is to ensure that drugs are dispensed only under the supervision of treating doctors who monitor patients’ drug therapies.  Omnicare blatantly ignored this obligation in favor of pushing drugs out the door as quickly as possible to make more money.  This Office will continue to hold accountable those who put at risk people’s health and safety just to turn a profit.”

Meanwhile, HHS-OIG Special Agent in Charge Scott J. Lampert said:  “Failing to consult doctors as to whether prescriptions should be refilled places patients’ health and medical care at serious risk.  These automatic rollover refills could have significant consequences for vulnerable people in long term-care facilities.  We will continue working with law enforcement partners to protect people depending on these taxpayer-funded government health programs.”

Charges Suggest Potential Advisability For Plan Audit of Prescription Drug Charges To Confirm Supported By Valid Prescription For Dispensed Drugs

The charges made in the complaint filed against Omnicare highlight an area of claims payment eligibility not regularly verified by many pharmacy benefit and other health claims administrators when administering pharmacy benefit claims- the existence of a current valid prescription to support the dispensation of the billed prescription medication.  Except for pain management and certain other medications flagged by regulators or benefit systems as subject to heightened abuse risks, many plan administrators regularly take for granted existence of a current, valid script for many common, frequently issued and renewed, low cost prescriptions issued within frequency and other guidelines based upon the assumption that legal and ethical obligations of pharmacists and pharmacies under licensing, Drug Enforcement Agency and other rules generally provides adequate deterrence against abuses like those the DOJ accuses Omnicare of engaging in its complaint.  However, growing corporate or other nonprofessional ownership or management of pharmacies and their management coupled with very limited, virtually all complaint driven oversight of federal and state regulatory and ethical agencies is diminishing the frequency and effectiveness of such oversight.  As evidenced by the Omnicare complaint, scrupulous pharmacies may leverage opportunities allowed by this limited oversight to dispense and bill for commonly renewed prescription medication without proper orders in a manner that potentially places patients at risk at the expense of plans and their participants, beneficiaries, sponsors and insurers.  Plans, insurers, fiduciaries, plan sponsors and administrators concerned about these risks may want to use the Omnicare lawsuit announcement as an opportunity to educate plan members and their caregivers about the importance of monitoring prescriptions, their refills and claims for abuse; audit and encourage plan members and their caregivers of members with claims paid with respect to Omnicare and other pharmacy claims’ and take other steps to assess the adequacy and tighten as appropriate their existing pharmacy benefit review procedures for verification of the existence of a current, valid prescription to mitigate these exposures.  These exposures are further heightened by the widespread practice of outsourcing of pharmacy claims to prescription benefit management or other speciality pharmacy claims providers in many health plan designs including vendoirsand service providers owned or managed by parents or related companies of the pharmacy filling and billing for the scripts.

Health plan fiduciaries, administrators and sponsors that discover potential deficiencies in the validity of a prescription or other elements of a received or previously paid prescription benefit or other claim are cautioned to review and follow the applicable ERISA and for insured plans, state insurance, Patient Protection and Affordable Care Act (“ACA”) and contractual claims and appeals timelines and processes.  Failure to follow these requirements can undermine the enforceability of plan remedies as well as expose the plan, its insurer or fiduciary to administrative penalties and other liabilities.  Additionally, violations of the ACA mandated procedures also  in the case of employment based plans also could expose  the sponsoring employer or ubnion to liability for self reporting, self-assessment and payment of penalties under Internal Revenue Code Section 6039D.  Where relevant regulatory or contractual time periods for  denial have already expired either because the claim already was paid or the analysis otherwise was not timely completed in time to meet the deadline, plans may need to rely upon filing health care fraud or other avenues of relief in lieu of attempting to retroactively deny and recoup the questioned amounts in order to avoid violating the ACA and other rules.  Plan fiduciaries and administrators also may need to consider the applicability of offering  review by an independent medical review organization to fulfill ACA or other similar mandatesfor medical judgement based determinations.

More Information

We hope this update is helpful. For more information about this or other labor and employment developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.

Solutions Law Press, Inc. invites you receive future updates by registering on our Solutions Law Press, Inc. Website and participating and contributing to the discussions in our Solutions Law Press, Inc. LinkedIn SLP Health Care Risk Management & Operations Group, HR & Benefits Update Compliance Group, and/or Coalition for Responsible Health Care Policy.

About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

Scribe for the ABA JCEB Annual Agency Meeting with OCR, Vice Chair of the ABA International Section Life Sciences Committee, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and the ABA RPTE Employee Benefits & Other Compensation Group, Ms. Stamer’s work throughout her 30 plus year career has focused heavily on working with health care and managed care, health and other employee benefit plan, insurance and financial services and other public and private organizations and their technology, data, and other service providers and advisors domestically and internationally with legal and operational compliance and risk management, performance and workforce management, regulatory and public policy and other legal and operational concerns.  As a part of this work, she has continuously and extensively worked with domestic and international hospitals, health care systems, clinics, skilled nursing, long term care, rehabilitation and other health care providers and facilities; medical staff, accreditation, peer review and quality committees and organizations; billing, utilization management, management services organizations, group purchasing organizations; pharmaceutical, pharmacy, and prescription benefit management and organizations; consultants; investors; EMR, claims, payroll and other technology, billing and reimbursement and other services and product vendors; products and solutions consultants and developers; investors; managed care organizations, self-insured health and other employee benefit plans, their sponsors, fiduciaries, administrators and service providers, insurers and other payers, health industry advocacy and other service providers and groups and other health and managed care industry clients as well as federal and state legislative, regulatory, investigatory and enforcement bodies and agencies.

Ms. Stamer is most widely recognized for her decades-long leading edge work, scholarship and thought leadership on health and other privacy and data security and other health industry legal, public policy and operational concerns.  This  involvement encompasses helping health care systems and organizations, group and individual health care providers, health plans and insurers, health IT, life sciences and other health industry clients prevent, investigate, manage and resolve  sexual assault, abuse, harassment and other organizational, provider and employee misconduct and other performance and behavior; manage Section 1557, Civil Rights Act and other discrimination and accommodation, and other regulatory, contractual and other compliance; vendors and suppliers; contracting and other terms of participation, medical billing, reimbursement, claims administration and coordination, Medicare, Medicaid, CHIP, Medicare/Medicaid Advantage, ERISA and other payers and other provider-payer relations, contracting, compliance and enforcement; Form 990 and other nonprofit and tax-exemption; fundraising, investors, joint venture, and other business partners; quality and other performance measurement, management, discipline and reporting; physician and other workforce recruiting, performance management, peer review and other investigations and discipline, wage and hour, payroll, gain-sharing and other pay-for performance and other compensation, training, outsourcing and other human resources and workforce matters; board, medical staff and other governance; strategic planning, process and quality improvement; meaningful use, EMR, HIPAA and other technology,  data security and breach and other health IT and data; STARK, ant kickback, insurance, and other fraud prevention, investigation, defense and enforcement; audits, investigations, and enforcement actions; trade secrets and other intellectual property; crisis preparedness and response; internal, government and third-party licensure, credentialing, accreditation, HCQIA and other peer review and quality reporting, audits, investigations, enforcement and defense; patient relations and care;  internal controls and regulatory compliance; payer-provider, provider-provider, vendor, patient, governmental and community relations; facilities, practice, products and other sales, mergers, acquisitions and other business and commercial transactions; government procurement and contracting; grants; tax-exemption and not-for-profit; privacy and data security; training; risk and change management; regulatory affairs and public policy; process, product and service improvement, development and innovation, and other legal and operational compliance and risk management, government and regulatory affairs and operations concerns. to establish, administer and defend workforce and staffing, quality, and other compliance, risk management and operational practices, policies and actions; comply with requirements; investigate and respond to Board of Medicine, Health, Nursing, Pharmacy, Chiropractic, and other licensing agencies, Department of Aging & Disability, FDA, Drug Enforcement Agency, OCR Privacy and Civil Rights, Department of Labor, IRS, HHS, DOD, FTC, SEC, CDC and other public health, Department of Justice and state attorneys’ general and other federal and state agencies; JCHO and other accreditation and quality organizations; private litigation and other federal and state health care industry actions: regulatory and public policy advocacy; training and discipline; enforcement;  and other strategic and operational concerns.

Author of leading works on HIPAA and a multitude of other health care, health plan and other health industry matters, the American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting and a former Council Representative, Past Chair of the ABA Managed Care & Insurance Interest Group, former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her extensive publications and thought leadership as well as leadership involvement in a broad range of other professional and civic organizations. For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources available here such as:

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NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advice or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The author and Solutions Law Press, Inc. disclaim, and have no responsibility to provide any update or otherwise notify anyone any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.

Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.

©2019 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™ For information about republication, please contact the author directly. All other rights reserved.

 

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