In 2004, Attorney General Elliot Spitzer filed a lawsuit against Express Scripts, the nation’s third largest PBM, on behalf of a New York state employee benefit plan.  Spitzer alleged, among other matters, that Express Scripts wrongfully (a) manipulated manufacturer rebates; (b) inflated the cost of generic drugs; (c) fraudulently deceived doctors and thereby switched prescriptions from lower-to-higher cost drugs; (d) sold data belonging to New York state, etc.  Other states also filed litigation against Express Scripts making similar allegations.

In May 2008, 28 states and the District of Columbia settled the litigation against Express Scripts for $9.8 million.  Articles summarizing the litigation and settlements can be read here and here.

Attorney David Balto has written an excellent summary of the status (as of January 2009) of federal and state litigation against the three largest PBMs.

The litigation and settlements reflect the problems that are rampant in the PBM industry.  The upcoming termination dates of many of the governments’ settlement compliance agreements makes clear that all such problems must be addressed by “airtight” PBM/client contracts.

We urge all payers to review the referenced documents, and ensure that their PBM/client contracts address all of the PBM problems that government litigation has highlighted.