Healthy Skepticism Library item: 1310

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Freudenheim M.
U.S. Accuses Merck Unit of Cheating Health Plan
New York Times 2003 Jun 24
http://www.nytimes.com/2003/06/24/business/us-accuses-merck-unit-of-cheating-health-plan.html

Full text:

The Justice Department yesterday accused Medco Health Solutions, a large pharmacy benefit manager, of cheating the federal employees’ health plan.

The government action, based on a four-year inquiry, accused Medco’s mail-order unit of promoting the use of expensive drugs, charging for pills that were not delivered and favoring expensive drugs made by Merck & Company, which owns Medco, over less costly products.

Patrick L. Meehan, the United States attorney in Philadelphia, said the government was joining two whistle-blower civil lawsuits filed by two former Medco pharmacists and a physician, under federal and state false-claims laws.

Medco, which is based in Franklin Lakes, N.J., said in a statement that the charges were “absolutely untrue or reflect years-old isolated issues that were identified and corrected, and in no way and at no time compromised the quality of patient care.”

The accusations against Medco were in sealed complaints filed in 1999 by George B. Hunt and Walter W. Gaucher, who had worked in the Medco mail-order center in Las Vegas, and in 2000 by Dr. Joseph Piacentile, identified only as a New Jersey physician.

The complaints were unsealed yesterday after a lengthy investigation by James Sheehan of the United States attorney’s office in Philadelphia, together with the inspectors general of the Office of Personnel Management and the Department of Health and Human Services. Justice officials in Washington decided last week to join the whistle-blowers’ suits, effectively taking them over. The suits have been assigned to Judge Anita Brody of Federal District Court in Philadelphia.

The government complaint will build on and add to the whistle-blowers’ charges, officials said. The Federal Employees Health Benefit Program covers millions of employees, retirees and their families.

As summarized in a statement by Mr. Meehan’s office, the charges also include destroying mail-order prescriptions to avoid penalties in meeting deadlines for filling the orders; changing prescriptions based on “misleading or false information provided to treating physicians”; and failing to comply with state laws requiring reviews of potential harmful interaction among drugs.

The announcement yesterday was the latest of a number of investigations of the tactics of pharmacy benefit management companies by federal and state officials, prompted in part by increasing drug costs.

The companies have been accused of, and have generally denied, taking payments from drug manufacturers in return for promoting the latest, most expensive drugs.

The pharmacy benefit management companies would have an important role as intermediaries in delivering prescription drugs to elderly and disabled Americans under proposals in Congress to expand the federal Medicare program.

Last Friday, Express Scripts, a big pharmacy benefit manager based in St. Louis, said it had received a subpoena from Eliot Spitzer, the New York attorney general. Stephen Littlejohn, a spokesman for Express Scripts, said the company could not comment on whether it was a target of the investigation. He added that “our business model aligns our interests with those of our clients.”

Mr. Spitzer’s office had said earlier that it and a number of other state attorneys general were coordinating inquiries into Medco and other drug plan managers along with federal officials in Philadelphia. Regulators have also questioned AdvancePCS and Caremark Rx. Officials said the formal complaint against Medco would be filed in September. No charges have been filed against the other drug plan managers.

Merck, which has announced plans to spin off Medco to Merck shareholders, has agreed to a $42.5 million settlement in a separate civil lawsuit in Federal District Court in White Plains that raises similar issues; despite settling, the company rejects charges of wrongdoing. Some of the plaintiffs’ lawyers have asked Judge Charles L. Brieant to reject the settlement, which they say is too small.

Russ M. Herman, a lawyer for the plaintiffs who are opposing the settlement, said they would bring the Justice Department action before Judge Brieant.

Linda Cahn, another plaintiffs’ lawyer in the White Plains case, noted that the charges in the whistle-blower suits “apply not only to the federal government but to all Medco clients.”