Express Scripts to pay $9.5M in settlement

Published 3:09 pm Wednesday, May 28, 2008

Express Scripts Inc. on Tuesday said it will pay $9.5 million in an agreement with 28 states that alleged the pharmacy benefits manager misled consumers when it encouraged doctors to switch patients’ cholesterol drug brands under the guise of controlling costs.

The agreement resolving a four-year investigation of St. Louis-based Express Scripts follows a similar $38.5 million multistate settlement in February with a rival benefits manager, Caremark, and a 2004 drug-switching settlement with Medco Health Solutions Inc.

Through the agreements, state attorneys general “have changed how these companies treat patients and doctors when they ask to change their prescription medications,” said Martha Coakley, attorney general in Massachusetts, one of the participating states, with $255,000 in settlement money. “Those requests now include full information on costs savings and the reasons for the proposed switch.”

Express Scripts said it will pay $9.3 million of the settlement total to the states and the District of Columbia. Another $200,000 will provide no more than $25 apiece to individual patients to reimburse them for physician visits and tests linked to switches between rival brands of cholesterol-controlling drugs known as statins.

Missouri Attorney General Jay Nixon said Express Scripts was deceptive in telling doctors in some cases that patients and their health plans would save money from a switch to a different drug brand to treat the same condition.

Express Scripts “did not clearly disclose to their client plans that money earned by Express Scripts accrued from the drug switching process would be retained by the company, and not passed directly to the client plan,” Nixon said.

In addition to the payments, Express Scripts is required under the settlement to make “clear and conspicuous disclosures” about its drug-switching practices, Coakley said.

Express Scripts said it would need to make “only minor adjustments” in its practices to comply. In agreeing to the settlement, the company said it did not admit any of the assertions by the attorneys general.

Express Scripts also said “it has implemented and continually refined its procedures to ensure that any drug switches were safe and appropriate, and intended lower costs for both its clients and plan sponsors.”

Express Scripts said it had previously set aside a financial reserve to cover the settlement costs, which are not expected to affect its second-quarter or future earnings.

Shares of Express Scripts rose $1.78, or 2.6 percent, to close at $71.54 Tuesday.

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

The same states were involved in February’s settlement with Caremark’s parent company, Woonsocket, R.I.-based CVS Caremark Corp.