Justice Department Files Lawsuit Against Medco, Seeks Permanent Injunction
The Justice Department on Monday filed a civil lawsuit against pharmacy benefit manager Medco Health Solutions, a former Merck subsidiary, seeking monetary damages and a permanent injunction for allegedly defrauding patients by improperly switching, canceling and destroying mail-order prescriptions, the Philadelphia Inquirer reports. The 60-page civil lawsuit, filed in U.S. District Court in Philadelphia, stated that such actions have been part of a "systemic pattern of conduct" since 1995 (Loyd, Philadelphia Inquirer, 9/30). The suit, which stems from two previously filed whistleblower lawsuits, pertains to Medco's services for federal employees and retirees, but the Wall Street Journal reports that the case's implications could extend to all patients whose prescriptions were filled by Medco (Hensley, Wall Street Journal, 9/30). A summary of some of the suit's allegations appears below.
- To meet quotas for the number of prescriptions processed every hour, employees delayed or destroyed prescriptions considered more time-consuming because they would require calling a doctor's office (Freudenheim, New York Times, 9/30).
- "[P]oorly trained assistants" were given duties normally assigned to pharmacists, including calling physicians to confirm prescriptions, the Philadelphia Daily News reports (Davies, Philadelphia Daily News, 9/30).
- To meet cost objectives for pharmacy operations, pharmacists canceled some prescriptions (Philadelphia Inquirer, 9/30).
- Pharmacy heads at the mail-order facilities who did not meet performance goals "received verbal attacks" during conference calls, the Daily News reports. If they did not perform well, they were fired and given 15 minutes to leave the building. Those who met the goals received stock options valued at $1 million (Philadelphia Daily News, 9/30).
- Merck, which owned Medco until last month, paid Medco $430 million in 2001 to "favor Merck's products over its competitors." In a separate civil lawsuit that raises similar issues about Medco, Merck agreed to settle for $42.5 million but admitted no wrongdoing (New York Times, 9/30).
- Medco also allegedly received kickbacks from other drug manufacturers. However, Medco officials said the payments are rebates and that those savings are transferred to customers, the AP/Las Vegas Sun reports (Caruso, AP/Las Vegas Sun, 9/30).
David Machlowitz, an attorney for Medco, said the allegations were "false, overstated or pertai[n] to unauthorized instances over several years that were identified and corrected" and that the company was not aware of any instances in which patient care was compromised (New York Times, 9/30). Medco CEO David Snow said in a statement, "The full story will show that our people are highly skilled, our policies are rigorously enforced and our pharmacy practices, which are regularly inspected by state boards of pharmacy, lead our industry in lowering the cost of providing high-quality health care for millions of Americans," (AP/Las Vegas Sun, 9/30). Patrick Meehan, U.S. Attorney for the Eastern District of Pennsylvania, who filed the suit, said, "Our objective is to look at the heart of the issue and to make sure the patient-pharmacist-physician relationship isn't destroyed by an economic model that seems to be putting the patient farther away from real information and real service" (Wall Street Journal, 9/30).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.