West Virginia Attorney General Darrell McGraw filed the suit in November 2002 (See West Virginia Sues Medco Over Drug Costs ),alleging that Medco kept rebates handed out by the drug companies that were intended for the state, according to Reuters.
The suit alleges that West Virginia’s 200,000 state employees were directed to higher priced drugs – including those sold by Medco’s former parent, the drug maker Merck & Co. Inc.- because of the millions of dollars in rebates from drugmakers. West Virginia contends it had an agreement with Medco by which all but 5% of the total rebates were to be passed back to the state. Medco violated this agreement by keeping more than its share, according to the suit. McGraw filed the suit on behalf of the Public Employees Insurance Agency and the state of West Virginia.
Circuit Court Judge Irene Berger granted Medco’s motion to dismiss Consumer Protection Act, fraud, conspiracy and tortuous interference claims. The claims the judge let stand include allegations of breach of contract, accounting and unjust enrichment, Medco said.
Medco operated as West Virginia’s pharmacy benefit manager (PBM) from June 2000 to July 2002. PBMs are designed to assist individuals reduce drug costs by pooling millions of requests to get rebates and discounts from drug makers and are currently utilized by 200 million Americans.