Cigna, Express Scripts Agree To Pay $27M To Settle New York State Drug Switching Case

Main Category: Primary Care / General Practice
Also Included In: Pharma Industry / Biotech Industry;  Public Health;  Litigation / Medical Malpractice
Article Date: 31 Jul 2008 - 7:00 PST

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Cigna and Express Scripts have agreed to a $27 million settlement in a 2004 lawsuit by New York State accusing Express Scripts of persuading physicians to switch prescriptions to drugs for which larger rebates could be obtained from manufacturers without informing patients of the change, the Hartford Courant reports. The state contracted with Cigna to insure its Empire Plan, which covered more than one million active and retired state and local government workers and their dependents, and Cigna subcontracted with Express Scripts to manage the drug plan benefit.

Express Scripts was supposed to negotiate the lowest possible price from drugmakers for the plan and return any rebate obtained to the state. However, then-Attorney General Eliot Spitzer (D) alleged that the pharmacy benefit manager committed fraud by disguising the rebates as administrative or other fees and keeping them. He had sought as much as $100 million in reimbursements, as well as penalties and fines. The suit also claimed Express Scripts inflated the price of generic drugs for the plan (Levick, Hartford Courant, 7/30). "Sometimes they would turn over some of the rebate to the state, but a lot of the time they would just pocket the money," Alex Detrick, spokesperson for New York State Attorney General Andrew Cuomo (D), said (Blain, New York Daily News, 7/30).

Under the agreement, consumers served by Express Scripts or other PBMs subcontracting with Cigna will receive notice when a drug switch is initiated and will be informed of their right to refuse the switch, Cuomo said. Express Scripts also will adopt new rules intended to make its practices more transparent to health organizations and consumers, including disclosing its pricing methods, the amount of payments received from drugmakers, the factors it considers when calculating targeted discount rates and the current discount rate for generics. The settlement money will be given to the Empire Plan. "The message is clear: companies that switch patients' drugs without informing them will be prosecuted to the fullest," Cuomo said (Bray, Dow Jones, 7/29).

Cigna and Express Scripts did not admit any wrongdoing in the agreement, and neither would disclose what portion of the $27 million they will pay. A statement from Cigna said, "In order to facilitate the settlement, we agreed to make a contribution, as prolonged litigation is not in anyone's best interest. We believe that at all times, Cigna fulfilled its obligations to the state of New York." Business practices employed by Express Scripts "already comply with essentially all requirements of the settlement" and only "minor adjustments in certain procedures will be needed due to the settlement," according to the Cigna statement. Express Scripts said that it did not conduct brand-name drug "therapeutic interchange programs" for the Empire Plan and that it does not recommend switching from higher-cost to lower-cost drugs or accept drugmaker funding for such programs (Hartford Courant, 7/30).

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