Express Scripts Accused Of Bilking New York Pharmacy Plan

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New York state officials are suing pharmacy benefit manager Express Scripts Inc. and two units of Cigna Corp., Philadelphia, for allegedly overcharging the states largest health plan for prescription drugs.

The companies charged in the case denied any wrongdoing.

In recent filing with the Securities and Exchange Commission, Express Scripts warned that it expected to be investigated for its drug pricing practices not only by New York state but also by 19 other states and the District of Columbia.

“We are cooperating with this multi-state investigation,” the company said in its filing. “We believe that our business practices comply in all material respects with applicable legal requirements.”

In response to the complaint, Cigna notes that its Cigna Life Insurance Company of New York and Connecticut General Life Insurance Company subsidiaries insure and reinsure the state health care plan and that it is the plans primary contractor.

“Express Scripts is responsible for providing all of the pharmacy benefit management services to the New York state plan,” the company says.

The New York suit charges that Express Scripts switched state employees and their beneficiaries to less expensive alternate prescription drugs and also took extensive discounts from drug manufacturers without passing on the savings to the Empire Plan, the largest employee health care plan in the state.

Express Scripts “improperly lined its pockets at the expense of health plans and consumers, driving up the very drug costs it is supposed to lower,” said state Attorney General Eliot Spitzer, who was joined in the suit by the state Civil Service Commission.

Spitzer said the lawsuit was the result of audits of Express Scripts conducted by the Office of State Comptroller in 2002.

Express Scripts strongly denies the charges and says it will defend itself “vigorously” in court.

“Express Scripts has saved the state of New York more than $2 billion in drug costs since 1998,” the company says in a statement. “During the contract, the state got all rebates for which it contracted and more rebates than guaranteed, initially deep retail discounts got better, and use of low-cost generic drugs increased.”

Similar claims against the company were filed in California Superior Court in March 2003 by the American Federation of State, County, and Municipal Employees. AFSCME also named pharmacy benefit managers Advance PCS, MedCo Health Solutions and Caremark Rx in that case for overcharging union health plans.

That case is still pending, an Express Scripts spokesman said.


Reproduced from National Underwriter Edition, August 5, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.