Attorney General Long’s Office Settles Consumer Protection Claims Against Express Scripts Inc.
PIERRE, S.D.- Attorney General Larry Long said today that South Dakota and 29 other states entered into a consumer protection settlement with Express Scripts Inc., one of the nation’s largest pharmacy benefits management (PBM) companies.
As part of the settlement, Express Scripts agrees to make a series of disclosures to consumers, doctors and employers about the company’s business practices. Express Scripts will pay $9.3 million to the States and up to $200,000 in reimbursement to patients who incurred expenses related to certain switches between cholesterol-controlling drugs. South Dakota will receive a total of $130,000 from this settlement, a portion of which can be used to benefit low-income, disabled or elderly consumers of prescription medications, to promote lower drug costs for state residents, to educate consumers concerning the cost differences among medications, or for similar purposes.
PBMs enter into contracts with employer and governmental health plans to process prescription drug claims for drugs provided to patients enrolled in those health plans; negotiate with drug companies to obtain discounts; negotiate discounts with participating retail pharmacies to provide dispensing services; and dispense drugs to patients through PBM-owned mail order pharmacies.
The settlement, in the form of an Assurance of Voluntary Compliance, asserts that Express Scripts engaged in deceptive business practices by not always acting in a manner consistent with its representations to consumers and employers about its pharmacy benefit management services. In particular, Express Scripts may have overstated the cost benefits of switching to certain preferred medicines. Moreover, Express Scripts did not clearly disclose to their clients plans that rebates accrued from the drug switching process would be earned by Express Scripts.
The settlement generally prohibits Express Scripts from soliciting drug switches when:
- The net drug cost of the proposed drug exceeds the net drug cost of the originally prescribed drug;
- The originally prescribed drug has a generic equivalent and the proposed drug does not;
- The originally prescribed drug’s patent is expected to expire within six months; or
- The patient was switched from a similar drug within the last two years.
The settlement requires Express Scripts to:
- Inform patients and prescribers what effect a drug switch will have on a patient’s co-payment;
- Inform prescribers of Express Scripts’ financial incentives for certain drug switches;
- Inform prescribers of material differences in side effects or efficacy between prescribed drugs and proposed drugs;
- Reimburse patients for out-of-pocket expenses for drug switch-related health care costs and notify patients and prescribers that such reimbursement is available;
- Obtain express, verifiable authorization from the prescriber for all drug switches;
- Inform patients that they may decline a drug switch and the conditions for receiving the originally prescribed drug;
- Monitor the effects of drug switches on the health of patients;
- Adopt a certain code of ethics and professional standards;
- Refrain from making any claims of savings for a drug switch to patients or prescribers unless Express Scripts can substantiate the claim; and
- Inform prescribers that visits by Express Scripts’ clinical consultants and promotional materials sent to prescribers are funded by pharmaceutical manufacturers, if that is the case.