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Attorney General William H. Sorrell Settles Consumer Protection Claims Against Express Scripts, Inc.

CONTACT: Julie Brill, Assistant Attorney General, (802) 828-3658

May 27, 2008 - Attorney General William H. Sorrell announced today that he has entered into a settlement of consumer protection claims against Express Scripts Inc., one of the nation’s largest pharmacy benefits management (PBM) companies. Joining Attorney General Sorrell in today’s settlement are 29 other states.

As part of the settlement, Express Scripts is required to significantly change its business practices. PBMs enter into contracts with employers and government health plans to process prescription drug claims for drugs provided to patients enrolled in the health plan; negotiate with drug companies to obtain volume discounts; negotiate discounts with participating retail pharmacies to provide dispensing services at a discount; and dispense drugs to patients through PBM-owned mail order pharmacies. In the thirty years since the first PBMs appeared, their services have evolved to include complex rebate programs, pharmacy networks, and drug utilization reviews.

Today’s settlement, in the form of an Assurance of Voluntary Compliance, asserts that Express Scripts engaged in deceptive business practices by encouraging doctors to switch patients to different brand name prescription drugs and representing that the patients and/or health plans would save money. But doctors were not adequately informed of the effect this switch would have on costs to patients and health plans. Moreover, Express Scripts did not clearly disclose to their clients plans that rebates accrued from the drug switching process would be retained by Express Scripts and not passed directly to the client plan.

“Today’s settlement completes our effort to clean up the PBM industry,” said Attorney General Sorrell. “Now that all three of the nation’s largest PBMs are under orders from our office and the court to reform their practices, we expect that the rest of the industry will take notice and follow the requirements we have established.”

In 2004, a group of 20 of states settled with Medco Health Solutions, Inc., the world’s largest pharmaceutical benefits manager. In February of this year, a group of 29 states settled with Caremark Rx, LLC, another of the world’s largest pharmaceutical benefits managers.

Today’s settlement generally prohibits Express Scripts from soliciting drug switches when:

  • The net drug cost of the proposed drug exceeds the net drug cost of the originally prescribed drug;
  • The cost to the patient will be greater than the cost of the originally prescribed drug;
  • The originally prescribed drug has a generic equivalent and the proposed drug does not;
  • The originally prescribed drug’s patent is expected to expire within six months; or
  • The patient was switched from a similar drug within the last two years.

The settlement requires Express Scripts to:

  • Inform patients and prescribers what effect a drug switch will have on a patient’s co-payment;
  • Inform prescribers of Express Scripts’ financial incentives for certain drug switches;
  • Inform prescribers of material differences in side effects or efficacy between prescribed drugs and proposed drugs;
  • Reimburse patients for out-of-pocket expenses for drug switch-related health care costs and notify patients and prescribers that such reimbursement is available;
  • Obtain express, verifiable authorization from the prescriber for all drug switches;
  • Inform patients that they may decline a drug switch and the conditions for receiving the originally prescribed drug;
  • Monitor the effects of drug switches on the health of patients;
  • Adopt a certain code of ethics and professional standards;
  • Refrain from making any claims of savings for a drug switch to patients or prescribers unless Express Scripts can substantiate the claim; and
  • Inform prescribers that visits by Express Scripts’ clinical consultants and promotional materials sent to prescribers are funded by pharmaceutical manufacturers, if that is the case.

Express Scripts will pay $9.3 million to the States and up to $200,000 in reimbursement to patients who incurred expenses related to certain switches between cholesterol-controlling drugs. Vermont will receive a total of $372,500 from this settlement. A portion of Vermont’s payment, $100,000, can be used to benefit low-income, disabled or elderly consumers of prescription medications, to promote lower drug costs for state residents, to educate consumers concerning the cost differences among medications, or for similar purposes.

The other states participating in today’s settlement Express Scripts are: Arizona, Arkansas, California, Connecticut, Delaware, District of Columbia, Florida, Illinois, Iowa, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nevada, New Mexico, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Virginia, and Washington.

More information about pharmaceutical issues and Vermont consumer protection in general may be found at www.atg.state.vt.us.

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