Medco’s New Rules: PBM Will Pay All Out-Of-Pocket Switch Costs, Limit Number Of Changes
This article was originally published in The Pink Sheet Daily
Executive Summary
Medco will pay all "drug interchange-related health care costs" incurred by consumers under a consent order entered April 26
|
Medco will pay all "drug interchange-related health care costs" incurred by consumers under a consent order entered April 26. "Medco shall pay all out-of-pocket costs for Drug Interchange-Related Health Care Costs incurred by a patient by reimbursing the patient for such costs within 30 days of receipt of a claims form for such costs," an injunction entered in Philadelphia federal court states. The injunction is included in settlements with 20 state attorneys general and the Philadelphia U.S. Attorney resolving a portion of the pending litigation against the pharmacy benefit management company. The injunction includes numerous provisions regarding Medco's therapeutic interchange programs and disclosures to clients and consumers. Among the more significant items is a requirement for Medco to reimburse patients for all costs associated with a therapeutic interchange. The example cited by the prosecutors involves the statin category. The states maintain that Medco would switch patients from competing statin brands to Merck's Zocor (simvastatin), for which Medco receives favorable pricing. However, the prosecutors maintain, Medco's pursuit of savings did not take into account end-users, because the "switch usually required patients to receive follow-up blood tests" that would increase out-of-pocket costs. The injunction requires Medco to set up a procedure for reimbursing out-of-pocket expenses, and to disclose the reimbursement policy "conspicuously and clearly" when contacting patients about switches. The injunction allows Medco to hire a third-party to audit claims in excess of $500 and pursue recovery "if a determination is made that the costs were not related to an interchange." Medco has also agreed not to switch patients repeatedly in the same therapeutic category. The company will not switch any patient more than once in any two year period, the injunction states. Medco is prohibited from making switches away from a brand name drug that has a generic equivalent, or that will lose patent protection in six months, or "where the effect of the proposed drug interchange reasonably is to avoid substitution for, or generic competition against" the brand. That condition is intended to resolve allegations that Medco seeks to protect brand rebates by moving patients to patent-protected brands ahead of generic launches. Medco is also prohibited from making any drug switch where the "net cost" of the new therapy exceeds the prescribed drug. The "net cost" is defined in the agreement as the amount paid by the client - not including any rebates retained by Medco. The injunction requires Medco to contact all patients by letter and by phone regarding any drug switches for mail order scripts. Medco's current practice is to include a written notice of the switch with the prescription mailed to the patient. Medco said its call centers have the capacity to handle the new requirement. The consent order also requires Medco to provide "clear and conspicuous" disclosures to patients and clients about rebates and other price concessions. As part of the settlement, Medco agreed to pay the 20 states $29.3 mil.; the company has not yet reached a financial settlement with the U.S. Attorney. - Michael McCaughan |