Kostyu re: The STRS/Medco court case -- oldie but goodie! A "flashback" with contemporary times!

From John Curry, December 1, 2006: Yes, an oldie but a goodie article. Take particular note of what Dr. Asbury said about STRS being taken to the cleaners: “We have very high performance standards for the vendors we contract with,” said Damon Asbury, interim executive director of STRS. “The audit procedures we have in place to review performance helped to uncover some of the abuses.” So, Damon is aware of what PBM's ARE CAPABLE OF. Now, I think you can see

where CORE's John Bos is coming from in his letter you received earlier today? John
Petro: Medco overcharged STRS millions
The Times-Reporter, Dover-New Philadelphia, OH
December 23, 2003
By PAUL E. KOSTYU, Copley Columbus Bureau
COLUMBUS– The state has sued the nation’s largest pharmacy benefit manager saying it overcharged the State Teachers Retirement System by as much as $50 million over 13 years.

Attorney General Jim Petro sued New Jersey-based Medco Health Solutions on Monday in Hamilton County Common Pleas Court. The lawsuit contends Medco kept $8.30 per prescription since 1988 that should have gone to the pension fund.

Petro said the company “maliciously demonstrated a complete lack of care and conscious disregard for the rights of STRS Ohio. The corporate culture of Medco encouraged profit above service.”

Three other state pension funds – Ohio Public Employees Retirement System, Ohio School Employees Retirement System and Highway Patrol Retirement System – use Medco as their pharmacy benefit manager.

Kim Norris, a spokeswoman for Petro, recommended they look closely at Medco’s service.

“The allegations are a rehash of what we’ve seen before,” said David Machlowitz, general counsel and secretary of Medco. “We believe the allegations lack merit.”

Medco faces a federal lawsuit filed in Philadelphia in September accusing it of violating federal false claims laws. The company asked a federal judge in that case on Friday to dismiss the suit.

STRS ended its contract with Medco in 2001 when it switched to AdvancePCS Health of Alabama. The change was the result of a competitive bid process and not related to the case, said Laura Ecklar, a spokeswoman for STRS.

The suit claims Medco, which has 3,600 Ohio employees, violated Ohio’s Consumer Sales Practices and Deceptive Trade Practices acts, unjustly enriched itself at the expense of STRS, and defrauded the system and its retirees.

“We have very high performance standards for the vendors we contract with,” said Damon Asbury, interim executive director of STRS. “The audit procedures we have in place to review performance helped to uncover some of the abuses.”

Ecklar said the federal and state cases are similar, but the Ohio case is the result of an internal investigation by STRS. That investigation showed Medco overcharged STRS more in mail-order dispensing fees. The overcharges were hidden in reduced rebate payments to STRS.

The STRS audit also showed that Medco charged one-third more for generic drugs filled by mail order than retail pharmacies were charging for the same drugs. Asbury said STRS believes Medco kept the cost difference rather than give it to STRS.

Rebates from pharmacy benefit managers help fund health care benefits for STRS members. Ecklar said any recovery from the suit will be put in the system’s Health Care Stabilization Fund.

Retired teachers reported to STRS that Medco under-counted pills on a regular basis.

Machlowitz said surveys of STRS and the other pension funds show a high level of consumer satisfaction.

“Medco Health prides itself on its integrity,” he said. “We believe we have abided by the letter and spirit of all applicable laws.”

Petro’s complaint alleges Medco employees falsified prescription orders to appear to meet contractual performance guarantees by deleting prescriptions and re-entering them with a different date. That delayed getting prescriptions to STRS members.

The complaint also alleges Medco engaged in the illegal practice of using non-pharmacist personnel to dispense or cancel patient prescriptions without the required review by a licensed pharmacist.

Machlowitz said Medco’s pharmacy practices are inspected regularly by the Ohio State Board of Pharmacy as well as boards in other states.

The federal case accuses the company of altering records to avoid having to pay penalties on late deliveries. It said the company failed to follow laws requiring consultations with doctors about certain prescriptions. It also said Medco pressured doctors to switch patients to drugs made by Medco’s former owner, pharmaceutical giant Merck & Co.

In still other lawsuits, a New Jersey judge dismissed two cases where Medco was accused of making inappropriate claims for co-payments for a particular prescription drug.

A pharmacy benefit manager acts on behalf of employers, including state agencies, pension systems, insurance companies and other health care payers, to get discounts by negotiating prices with drug companies.

Petro hired the law firm of Waite, Schneider, Bayless & Chesley in Cincinnati as special counsel for the suit. Norris said filing the case in Cincinnati was a legal strategy because Petro believes the suit has a better chance at success there. The case could have been filed in any Ohio county.