20 ATTORNEYS GENERAL SETTLE CONSUMER PROTECTION CLAIMS AGAINST MEDCO HEALTH SOLUTIONS

Medco to provide price information to doctors and patients; $29+ million to states

Attorney General J. Joseph Curran, Jr. announced today that he, along with Attorneys General from 19 other states, entered into a settlement of Consumer Protection Act claims against Medco Health Solutions, Inc. (Medco), the world’s largest pharmaceutical benefits management (PBM) company.

Attorney General Curran’s Consumer Protection Division filed a complaint in Baltimore City Circuit Court today alleging that Medco encouraged prescribers to switch patients to different prescription drugs but failed at times to pass on the resulting savings to patients or their health care plans. The complaint alleges that the drug switches generally benefited Medco despite Medco’s claims that they saved patients and health plans money and that Medco did not disclose to consumers that the switches would increase rebate payments it received from drug manufacturers. The complaint alleges that the drug switches increased costs to health plans and patients, primarily in follow-up doctor visits and tests. For example, Medco switched patients from certain cholesterol lowering medications to Zocor, which usually required patients to obtain follow-up blood tests.

The settlement prohibits Medco from soliciting drug switches when:
· The net drug cost of the proposed drug exceeds the cost of the prescribed drug;
· The prescribed drug has a generic equivalent and the proposed drug does not;
· The switch is made to avoid competition from generic drugs; or
· The patient has recently been switched from a similar drug.

The settlement requires Medco to:
· Inform prescribers and patients of the cost savings for health plans and the difference in patient co-payments;
· Inform prescribers and patients of Medco’s financial incentives for certain drug switches;
· Inform prescribers of material differences in side effects between prescribed drugs and proposed drugs;
· Reimburse patients for out-of-pocket costs 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 the drug switch and receive the initially prescribed drug;
· Monitor the effects of drug switches on the health of patients; and
· Adopt a certain code of ethics and professional standards.

In addition, Medco will pay $26.8 million to the states and about $2.5 million directly to patients who incurred expenses related to a certain switch between cholesterol controlling drugs. $20.2 million of the amount paid to the states must be used to benefit low-income, disabled, or elderly consumers of prescription medications, to promote lower drug costs for residents of the state, or for similar purposes. Maryland will receive approximately $625,000 for this purpose and an additional $210,000 for attorneys fees and costs.

“ This settlement will ensure that consumers are not switched from low-cost drugs to higher-cost drugs when it is not in the consumers’ or health plans’ best interest,” said Attorney General Curran.

The participating states are: Arizona, California, Connecticut, Delaware, Florida, Illinois, Iowa, Louisiana, Maine, Maryland, Massachusetts, Nevada, New York, North Carolina, Oregon, Pennsylvania, Texas, Vermont, Virginia and Washington. An investigation by the states into Medco’s drug switching practices began more than two years ago and was lead by Attorneys General in Maine, Massachusetts, and Pennsylvania. During stages of the investigation, the states consulted with the Office of the United States Attorney for the Eastern District of Pennsylvania

Medco is the nation’s largest PBM, with over 62 million covered lives. PBMs contract with health plans to process prescription drug payments to pharmacies for drugs provided to patients enrolled in the health plan. In the thirty years since the first PBMs appeared, their services have evolved to include complex rebate programs, pharmacy networks, and drug utilization reviews.

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