Centene settles PBM lawsuits with Ohio, Mississippi for $143 million
The settlement is the "first and largest in the country secured by a state attorney general against a pharmacy benefit manager," Ohio AG says.
Photo: Ljuba/Getty Images
Centene has settled lawsuits in Ohio and Mississippi alleging the company overcharged the states' Medicaid programs for pharmacy services, according to Centene and the states' attorneys general.
One June 14, Ohio Attorney General Dave Yost and Mississippi Attorney General Lynn Fitch announced Centene had agreed to pay Ohio and Mississippi $88.3 million and $55.5 million respectively. As part of the settlement, the company denies any liability, and Yost will drop his lawsuit.
Both lawsuits accused Centene and its pharmacy benefit manager subsidiaries, such as Envolve Pharmacy Solutions, of spread pricing – the artificial inflation of prescription drug prices.
Centene allegedly filed reimbursement requests for amounts already paid by third parties, did not accurately disclose the true cost of pharmacy services and artificially inflated dispensing fees, according to Yost.
At the time of the Ohio lawsuit's filing in March, Centene strongly disputed the allegations and called them "unfounded."
The company said that it restructured its pharmacy benefits operations in 2019 to create more transparency and to eliminate spread pricing. Envolve will no longer serve as a PBM and will instead operate as an administrative service provider.
WHY THIS MATTERS
Yost called the settlement the "first and largest in the country secured by a state attorney general against a pharmacy benefit manager."
In light of ongoing talks with a group of plaintiffs, Centene has set aside $1.1 billion for any liability and potential payout in other states.
THE LARGER TREND
PBMs have come under fire as being middlemen that control prescription drug costs and determine which medications are covered by health insurance companies.
PBMs contract with and reimbursing pharmacies, create preferred drug lists and negotiate rebates with pharmaceutical companies.
The role of states in regulating PBMs is a hotly debated subject that has wound its way to the U.S. Supreme Court.
In Rutledge v. PCMA, Arkansas Attorney General Leslie Rutledge contended with the Pharmaceutical Care Management Association over Arkansas legislation called Act 900. The act specifically sought to regulate pharmacy benefit managers' drug-reimbursement rates.
The PCMA has argued that states cannot regulate PBM practices because state law is preempted by the uniform Employee Retirement and Income Security Act of 1974. AHIP has come out in support of the argument.
In an amicus curiae brief filed in 2020, the American Public Health Association, the National Community Pharmacists Association, the Arkansas Pharmacists Association and the National Alliance of State Pharmacy Associations stated PBM practices are harming patients and pharmacies by increasing drug costs and threatening patient access to medications and pharmacists.
Most Ohioans' prescription-drug plans are under the management of a PBM through their health insurance plans. About 2.9 million Ohioans get coverage from The Department of Medicaid's taxpayer-funded medical assistance plan.
ON THE RECORD
"Centene used sophisticated moves to bill unearned dollars – moves known only at the top levels of health care companies," Yost said. "It has taken a huge effort by my team to untangle this scheme – and now that we know how it works the alarm bells should be ringing for anyone using similar tactics."
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