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May 27, 2008
Attorney General McKenna announces Express Scripts to pay $9.5 million to resolve consumer protection claims

SEATTLE – Washington Attorney General Rob McKenna announced today that 28 states and the District of Columbia entered into a $9.5 million settlement with Express Scripts Inc., one of the nation’s largest pharmacy benefits management companies.

“Doctors and patients need to be told the truth about how their prescription drug choices will affect their health and their pocketbook,” McKenna said. “Today’s settlement with Express Scripts is part of our ongoing efforts to ensure that pharmacy benefit managers conform to the ethical business standards that all of us deserve and expect,” McKenna said.

McKenna thanked Attorney General Bob Lipson for his leadership on the executive committee that negotiated the Express Scripts settlement, as well as two previous multistate settlements with Caremark Rx, LLC, and Medco Health Solutions, Inc.

The Washington Attorney General’s Office filed an Assurance of Discontinuance in Thurston County Superior Court. Other states filed similar versions of the agreement, in which Express Scripts agrees to make a series of disclosures to consumers, doctors and employers about its business practices.

The company will pay $9.3 million to the states, a portion of which can be used to provide drugs to low-income, disabled or elderly consumers, educate consumers about prescription drug costs or for similar uses. Washington’s share is nearly $198,000. The state will also receive $272,500 in attorneys’ fees.

In addition, Express Scripts will pay up to $200,000 in refunds to patients who incurred expenses related to certain switches between cholesterol-controlling drugs. 

The states allege that Express Scripts engaged in unfair business practices by not clearly disclosing all details about the drug switching process. On occasion, the company may also have unfairly communicated the cost benefits from switching prescriptions.

“Prescription drugs are costly,” Lipson said. “In dealing with plans, patients and doctors, we want the pharmaceutical benefits industry to exhibit the highest standards possible.”

The settlement generally prohibits Express Scripts from soliciting drug switches when:

  • The net cost of the proposed drug exceeds that of the originally prescribed drug,
  • The originally prescribed drug has a generic equivalent and the proposed drug doesn’t,
  • 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 agreement requires Express Scripts to:

  • Inform patients and prescribers what effect a drug switch will have on a patient’s co-payment,
  •  Inform prescribers of Caremark’s 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 health care costs related to drug switches and notify patients and prescribers that 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 claims,
  • Refrain from restocking and re-shipping returned drugs unless permitted by applicable law, and
  • Inform prescribers that visits by Express Script’s clinical consultants and promotional materials sent to prescribers are funded by pharmaceutical manufacturers, if that is the case.

In addition to Washington, the following states and the District of Columbia participated in the settlement: Arizona, Arkansas, California, Connecticut, Delaware, Florida, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nevada, New Mexico, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Vermont and Virginia.

Pharmacy benefits management companies, or PBMs, enter into contracts with employers, health insurance providers and government health plans to process claims for prescription medicines provided to patients enrolled in the health plan. They also negotiate with drug companies to obtain volume discounts, negotiate with retail pharmacies to provide dispensing services at a discount and dispense drugs to patients through mail-order pharmacies. In the 30 years since the first PBMs appeared, their services have evolved to include complex rebate programs, pharmacy networks and drug use reviews.

In 2004, 20 states settled with Medco Health Solutions, Inc., the world’s largest pharmaceutical benefits manager. Washington used its share of the settlement to provide nearly $700,000 in grants to community health clinics, rural public hospital districts and other agencies in Washington.

In February 2008, a group of 29 states reached a $41 million settlement with Caremark Rx, LLC, another of the world’s largest pharmaceutical benefits managers. Washington received nearly $680,000 for programs to benefit consumers and $1 million in attorneys’ fees.

Express Scripts AOD

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Media Contact: Kristin Alexander, Media Relations Manager - Seattle, (206) 464-6432


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