Ohio lawsuits against drug middlemen headed for the long haul

Ohio has been one of the most active states litigating against drug middlemen, whom Attorney General Dave Yost accuses of bilking state agencies out of tens of millions of dollars.

Other states also have been active in court against the healthcare giants. Notably, Arkansas last year squared off at the U.S. Supreme Court against the industry association representing the middlemen — and won.

But Yost has been a leader in scrutinizing “pharmacy benefit managers” since 2018, when he was still state auditor. He released an audit of Ohio’s Medicaid prescription drug business concluding there wasn’t nearly enough transparency for state officials to know whether taxpayers were getting their money’s worth from the $2.5 billion annual expenditure.

Since becoming AG in January 2019, Yost has filed suit against three corporations involved in the PBM business. In announcing the first, he memorably promised that more were to come.

“I get the question from time to time, ‘Are there any other shoes to drop?’ Baby, we’re in DSW,” Yost said in February 2019, making a reference to the Designer Shoe Warehouse.

In an interview earlier this year, the attorney general moderated that stance a little, saying that bringing the suits is extraordinarily complex. It requires analyzing huge numbers of drug transactions and building cases that his PBM team thinks can stand up against sophisticated and well-funded defendants.

The status of the three filed so far:

• Centene — Yost in March sued the St. Louis-based company, the largest Medicaid managed-care contractor in the United States. The suit accuses the company of working through a chain of contracts involving two of its own PBMs and CVS Caremark to overbill the health program for the poor by tens of millions. Centene denies the accusation.

Ohio so far is the only state to sue the company, but Kansas, Mississippi, Arkansas, Georgia, Oklahoma, Mississippi, New Mexico and the District of Columbia have also been reported to be taking a critical look at Centene’s conduct.

After Yost filed the case in state court, Centene removed it to federal court. Yost’s office is trying to reverse that and on May 28, Centene filed a motion to keep the case in federal court.

• Express Scripts — The AG’s office last July sued St. Louis-based Express Scripts, part of healthcare giant Cigna. The suit accuses the PBM of not delivering guarantees on drug discounts and other violations of its contract with the Ohio Highway Patrol Retirement System.

As with Centene, Express Scripts denies the accusation, but Yost said, “This particular PBM egregiously charged for services it didn’t deliver. Its repeated breaches cost Ohioans millions, and we want our money back.”

The two sides have filed dozens of pleadings in the Franklin County Court of Common Pleas and for now the trial is scheduled for Nov. 14, 2022.

• OptumRx — In February 2019, Yost sued Irvine, Calif.-based Optum, part of UnitedHealth, the nation’s fifth-largest corporation. The suit says that Optum overcharged the Ohio Bureau of Workers’ Compensation by $16 million, which Optum denies.

That suit is set to go to trial in the Franklin County Court of Common Pleas on May 31, 2022.

• CVS Caremark/OptumRx — Yost’s office also is involved in litigation that predates his tenure as attorney general. Following up on a Columbus Dispatch investigation, the Ohio Department of Medicaid in 2018 obtained all of the PBM generic-drug reimbursement data from 2017 and found that CVS and Optum billed the state almost a quarter-billion dollars more for generics than it paid the pharmacies that dispensed them.

The version of the report that was released to the public was highly redacted and the two PBMs have been fighting the Medicaid department’s attempts to release an unredacted version.

The fight continues even though The Dispatch in 2019 obtained an unredacted version of the document. It appeared to show that CVS favored its own retail pharmacies over big competitors, such as Wal Mart.

After numerous continuances, a trial in the matter is now scheduled in the Franklin County Court of Common Pleas for Sept. 9.

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This story was republished from the Ohio Capital Journal under a Creative Commons license.