Medco Health Solutions, Franklin Park, N.J., will pay a total of $29 million to settle allegations that it illegally switched drug prescriptions to alternative therapies in 20 states. The pharmacy benefit manager also said it has settled nonmonetary issues with the U.S. attorney in Philadelphia related to civil whistleblower lawsuits. Massachusetts Attorney General Tom Reilly, one of the leaders of the drug-switching investigation, said in a news release that Medco did not tell its client health plans, physicians or patients that switching prescriptions to competing drugs would increase the company's rebates from manufacturers. Medco, formerly part of Merck & Co., is the nation's largest PBM with 62 million covered lives. It settled without admitting wrongdoing.
Medco's president, chairman and chief executive officer, David Snow Jr., said in a news release that the settlement "is consistent with our goal to position Medco as the most transparent company in our industry." Under it, Medco is prohibited from initiating drug switches to higher-cost equivalents. The company also must disclose its financial incentives for switching drugs and obtain authorization from prescribing physicians. Meanwhile, in the Philadelphia settlement, Medco agreed to change business practices to resolve mail fraud allegations. Five counts of false claims, alleging that Medco destroyed prescriptions, paid kickbacks and defrauded the federal government, remain unresolved. -- by Mark Taylor