John Curry to Gary Russell: Time for transparency with PBMs

John Curry to Gary Russell, April 18, 2007
Subject: Fwd: Re: Gary, I still haven't received an answer!

Gary,

Good to hear from you. As an educated man, I find it difficult to believe that you misunderstood my direct questions to you (in two separate emails) as to who was allowed to come to STRS and view our current Caremark contract in its entirety. I guess we'll have to leave that up to the interpretation of the reader. From what you have now related.... it appears that even our very own STRS Board members are not allowed to view and/or discuss the terms of the contract in public. In my mind, this conflicts with Ohio's Sunshine Laws especially since public tax monies are used (in part) in the form of payments by STRS to our current PBM for Rx for retirees. That sounds like another battle on another day, doesn't it?

Your statement to me, in your email below, indicates that you still believe that PBM's are still saving significant dollars to those with whom they contract:

"All PBMs keep their pricing information confidential from competitors which, enables STRS Ohio to negotiate lower drug pricing for the overall market basket of prescription drugs."

That being said, I would like to ask you to think back a few years to 2003 when STRS was forced to take a PBM (Medco) to court in Cincinnati. I'm sure that you remember that one, don't you? For the reader, here is a capsule of that event:

Ohio

"Ohio v. Medco Health Solutions, Inc. - On December 22, 2003 the state of Ohio filed a lawsuit in Hamilton County Common Pleas Court against Medco Health Solutions. The suit held that the State Teachers Retirement System of Ohio was overcharged millions of dollars for prescription drugs. The State Teachers Retirement System sought up to $50 million from Medco, including $36 million in alleged overcharges for the dispensing fees on mail-ordered medications. Other allegations claim that Medco undercounted pills when filling prescriptions and permitted non-pharmacists to dispense and cancel patient prescriptions without the necessary oversight by a licensed pharmacist. The case also contended that Medco steered doctors, pharmacists, and patients to choose brand-name and higher-cost medications manufactured by Merck rather than selecting generic equivalents. On December 19, 2005 the Plaintiff's verdict found Medco liable for constructive fraud and awarded $6.9 million in damages plus $915,000 for the State Teachers Retirement System. It was found that PBMs have a fiduciary responsibility. And numerous settlement agreements involving varying degrees of information disclosure strongly recommend transparency as a reasonable solution to the problem."

"Proactive Litigation Against PBMs" Atty. David Balto - Feb. 14, 2006

Mr. Balto was a former FTC attorney who now is with a law firm in Washington DC. A "search engine" entry of Mr. Balto's name will certainly reveal his stellar credentials.

Gary, I'll have to agree with you in that we (STRS) are pretty well limited by the fact that we have to contract with a PBM for Rx - that is, unless multiple retirement systems in Ohio go together and form their own PBM. You and I both know that isn't feasible at the moment. But, what IS feasable is for STRS (and possibly other Ohio retirement systems) to forcefully negotiate for much more transparency in our soon-to-be negotiated contract with our next PBM."

I would like to attend the May meeting (that you mentioned) and will try to adjust my work schedule to be there. Had I retired with OPERS (with the same 30 years on the job) I wouldn't have this worry about my schedule adjustment as my total monthly healthcare premiums (spouse included) for an 80/20 PPO would be a reasonable $80 rather than the $600 plus that STRS wants for the same coverage. Instead, I am back to work so that I can afford "affordable" health care premiums for my wife and myself for a little less than $200 per month at my current job. I feel very sorry for those pre-65 year old retirees who are unable to do the same due to poor health. I am lucky!

Attorney Balto has a piece (attached to this email) which contains some suggestions concerning dealing with PBMs at contract time. I would trust that you would find time in your day to peruse the article and pass some of the suggestions on to those at STRS who will soon negotiate our next PBM contract. Thank you for your getting back to me on this issue.

John