Several states investigating PBMs over possible disclosure and overpayment issues
The stakes for Centene and other companies are particularly high when states bring suits related to their Medicaid programs, which are a major business for managed-care firms. (Photo: Shutterstock)
At least a half-dozen states and the District of Columbia are investigating pharmacy benefit managers, The Wall Street Journal reported. The probes focus on whether the companies fully disclosed details about their business and potentially received overpayments under state contracts, according to state officials and documents.
PBMs often have many lines of business that involve state governments, including handling the drug benefits of state employees and working with managed-care companies that administer Medicaid benefits.
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Details about the investigations’ focus typically are not public. Officials with some states said they are looking at companies in their Medicaid programs and state-employee plans. Among the companies under scrutiny are units of Centene Corp. UnitedHealth Group Inc. and CVS Health Corp.
“I’m aware of many states that are looking at this,” said Ohio Attorney General Dave Yost, a Republican. His office recently sued Centene, alleging it had misled the state’s Medicaid program about its pharmacy-related costs, resulting in overpayments by the state. States are at various stages of examining PBMs, he said, but he expects a couple of new suits to be filed this summer, and “before this is all done, I will be surprised if we don’t have a dozen or more states” bringing complaints against PBMs.
A Centene spokeswoman said it “provides pharmacy benefit programs for Medicaid and Medicare according to the regulations, laws and contractual guidelines issued by state agencies.” The Ohio suit’s claims are “unfounded and will be vigorously defended in court,” she said.
Tom Moriarty, CVS chief policy officer and general counsel, said the company works with state attorneys general “to demonstrate how PBM solutions deliver drug cost savings to clients, including significant savings to state budgets.” He said CVS faced a limited number of state investigations, with some dating back to early 2017.
The stakes for Centene and other companies are particularly high when states bring suits related to their Medicaid programs, which are a major business for managed-care firms. Ohio recently announced the winners of new contracts for its $20 billion Medicaid managed-care program, starting in 2022. But the state Medicaid agency said it had to defer its decision about Centene, which is currently a Medicaid plan in Ohio, because of the claims in the state’s suit against the company.
The state investigations “are concerning in terms of it being an overhang on the Medicaid business” if the probes or any resulting suits jeopardize state contracts, said Matthew Borsch, an analyst with BMO Capital Markets.
Several states, according to publicly available contracts and state officials, have hired the same law firm to investigate PBMs. Those include Ohio, Mississippi, Arkansas and Kansas. A partner with the firm said it also is working with Georgia and New Mexico.