Attorney General Gansler Settles Consumer Protection Claims Against Express Scripts, Inc.
Express Scripts to Pay Over $9 Million as Part of Settlement

BALTIMORE, MD (May 27, 2008) - Attorney General Douglas F. Gansler announced today that his Consumer Protection Division, along with the offices of 28 other Attorneys General, has entered into a settlement with Express Scripts, Inc., one of the nation’s largest pharmacy benefits management (PBM) companies. As part of the settlement, 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.

PBMs enter into contracts with employers and health plans to process prescription drug claims for drugs provided to patients enrolled in the health plan; 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. In the 30 years since the first PBMs appeared, their services have evolved to include complex rebate programs, pharmacy networks, and drug utilization reviews.

Today’s settlement, in the form of an Assurance of Voluntary Compliance and Discontinuance, alleges that Express Scripts engaged in deceptive trade practices by not always acting in a manner consistent with its representations to consumers and health plans about its pharmacy benefit management services. In particular, the settlement alleges that Express Scripts overstated the cost benefits of switching to certain preferred medicines. The settlement also alleges that Express Scripts did not make adequate disclosures concerning its receipt of rebates accrued from the drug switching process.

“This settlement will curb drug switches that do not benefit consumers and health plans, but only cost them more,” said Attorney General Gansler.

The settlement requires Express Scripts to make a series of disclosures to consumers, prescribers, and health plans about its business practices, and 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 patients and prescribers of the cost savings associated with a drug switch;
• Inform patients and prescribers of Express Scripts’ financial incentives for certain drug switches;
• Inform patients 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; and
• Adopt a certain code of ethics and professional standards.

As a result of today’s agreement, the Maryland Attorney General’s Office has entered into settlements with the nation’s three largest PBMs. In 2004, the Consumer Protection Division settled with Medco Health Solutions, Inc., and in February of this year, Attorney General Gansler and the Attorney General of Illinois led an investigation of and settlement with Caremark Rx, L.L.C.

The states participating in today’s settlement with Express Scripts are: Arizona, Arkansas, California, Connecticut, Delaware, District of Columbia, 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, Virginia, and Washington.