PRESCRIPTIONS Medco settles allegations of deceptions by 20 states

Now Medco will also call patients first, and patients can usually refuse.
TRENTON, N.J. (AP) -- In a case that could alter how prescriptions are filled nationwide, the nation's largest prescription benefits manager has agreed to pay $29 million to settle allegations by 20 states that it pressured doctors to switch patients' medications to benefit its bottom line.
Medco Health Solutions Inc., accused of "unfair or deceptive acts and practices" that violated the states' trade practices laws, also agreed Monday to new disclosures when it seeks to switch a patient's medication.
The Franklin Lakes, N.J.-based company also filed a settlement Monday with the U.S. Attorney's Office in Philadelphia requiring similar changes in its practices. That office is pursuing additional fines and penalties.
It began investigating Medco four years ago after receiving whistle-blower complaints from two Medco pharmacists and a third person. The states joined in the widening probe two years ago.
As a prescription benefit manager, Medco contracts with health plans to process prescription drug payments to pharmacies for medications provided to the plan members. It handles prescription coverage for more than 62 million Americans through some 55,000 retail pharmacies and a dozen mail-order pharmacies.
Accusation
Medco had been accused of favoring drugs that bring the company the biggest rebates from manufacturers, and not passing all those savings on to its clients, as many of their contracts required. Some drug switches cost patients or their health plans more, as a result of higher co-pays or required follow-up tests.
Medco denied any wrongdoing.
Steven Rowe, Maine's attorney general, explaining why the settlement contains no admission of guilt, said the states wanted to expedite changes. "It would have taken years to have gotten to this point through litigation," Rowe said.
The prosecutors said those changes should save money for both health plans and patients.
"We have set the gold standard for how we expect PBMs to operate," Massachusetts Attorney General Thomas Reilly said, noting that the state prosecutors have cases pending against other prescription benefit managers. "We are hoping the industry will adopt the standards as we get ready for Medicare prescription drug coverage in 2006."
Medco officials said the changes will begin within 120 days and will affect all company clients in every state.
"This constructive approach to resolving issues raised by the attorneys general and the Justice Department serves the interests of our company and our customers," said David B. Snow Jr., Medco's chairman and chief executive officer.
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