Ohio STRS Sues Medco

December 23, 2003 (PLANSPONSOR.com) - Another state has accused Medco Health Solutions Inc. of gaming its prescription drug prices to line its pockets.

The state of Ohio filed suit against Medco for allegedly shortchanging the State Teachers Retirement System of Ohio (STRS) on its prescription drug coverage. This accusation was based on an audit conducted by STRS that estimates the pharmacy benefit manager (PBM) overcharged the system by $50 million between 1988 and 2001, including $36 million from mail-order prescriptions, according to a Cincinnati Business Courier report.

During the audit, STRS uncovered the former subsidiary of Merck & Company Inc. often sold drugs at higher prices than pharmacies, even though the system thought mail-order operations ought to have lower costs. The lawsuit accused Medco of keeping the savings, although it was supposed to pass them along to the system

Additionally, members of the retirement system reported their prescriptions often arrived with too few pills and they accused the company of underfilling orders. The system also accused Medco of falsifying prescription records to make it appear it was meeting performance targets.

“Medco’s conduct maliciously demonstrated a complete lack of care and conscious disregard for the rights of STRS Ohio,” Attorney General Jim Petro said in a news release. “The corporate culture of Medco encouraged profit above service.” Petro filed the suit in Hamilton County Common Pleas Court in Cincinnati on behalf of the teachers retirement system.

Medco’s Legal Woes

Ohio’s suit only adds to the legal trouble the PBM has faced recently. In September, the Justice Department slapped Medco with a civil suit (See Justice Department Slaps Medco With Civil Suit ). and earlier this year a federal judge in the Southern District Court of New York gave preliminary approval to a settlement in a class-action suit involving Medco. Under terms of the $42.5-million pact, Medco does not admit guilt in the deal, but it does agree to ensure clients fully understand their pharmacy health care service (See Preliminary Approval Given In Medco Suit ).

Additionally, last November the West Virginia Attorney General sued Medco for allegedly keeping rebates handed out by the drug companies that were intended for the state. The suit alleges that West Virginia’s 200,000 state employees were directed to higher priced drugs because of millions of dollars in rebates from drug makers being received by the PBM (See West Virginia Sues Medco Over Drug Costs ).