Lawsuit Accuses Pharmacy Benefit Manager Caremark Rx of Reselling Returned Drugs
Two pharmacists who work for pharmacy benefit manger Caremark Rx have filed a lawsuit in 2nd Circuit Court in Leon County, Fla., accusing the company of illegally reselling prescription medicines returned by patients, the Wall Street Journal reports. While legal in six states, reselling returned prescription medicines is illegal in all other states, including Florida, the Journal reports. The pharmacists --- married couple Michael and Peppi Fowler -- filed the suit under Florida's False Claims Act, which allows individuals to sue when they believe a company has defrauded a state agency. They contend that in addition to reselling returned drugs, Caremark also defrauded Florida by charging the state twice for the same medications and lying about how quickly it sent medications to patients. Tennessee-based Caremark manages pharmacy benefits for 200,000 Florida employees, retirees and dependents. Michael Leonard, the Fowlers' attorney, said that Caremark is liable for more than $100 million in damages because the False Claims Act allows $10,000 fines for each fraudulent transaction. Caremark officials contend that the allegations are without merit and that all of the company's policies "with respect to returned goods are and always have been consistent and fully compliant with laws that govern [the company's] pharmacy practices." A spokesperson for Caremark said that "less than one half of 1% of the products distributed by the company was previously affected by restocking procedures." He added that the "restocking practices were not in effect at the time the company learned of the plaintiffs' allegations."
The lawsuit was unsealed in November after the Florida attorney general decided not to join the suit. At the time, a spokesperson for the state attorney general said that the state "didn't feel that the allegations warranted our intervention," but it could "intervene at any point in the future as the case develops." According to the Journal, testimony by Carlos Gonzalez, director of pharmacy operations in Caremark's Illinois mail-order facility, "suggests that the company had set up a plan to avoid the pharmacy laws of certain states that prohibit" the reselling of returned drugs. Gonzalez testified during a deposition in February as a witness knowledgeable about Caremark's policies on returned medications and other areas. He said that that workers in Caremark's mail-order facilities in Florida and Texas would send shipments of hundreds of returned drugs to his facility in Illinois about once per week. Any bottles returned directly to the Illinois facility or shipped from the Florida and Texas facilities that were still sealed were put back into supply for resale, he said. "It is my understanding that the Illinois law allowed us for putting those products back into inventory after they were checked," Gonzalez said. According to a 368-page transcript of the questioning, Gonzalez said that the returned drugs were restocked in Illinois in order to avoid laws against such practices in Florida and Texas. He also said that he was told to stop restocking returned drugs in the fall but was not told why. Illinois does not allow the reselling of returned drugs, and a spokesperson for the Illinois Department of Professional Regulation, which oversees pharmacy laws, said that the department has opened an investigation into the case. A spokesperson for Caremark said that "we are unaware of an inquiry by the state of Illinois but we will cooperate with any questions they might have."
Last month, Caremark sued Peppi Fowler for "inappropriately taking and giving to her attorney internal memos, e-mails and manuals that describe Caremark's business practices," the Journal reports. In addition, the Fowlers last week were suspended from their jobs and given a letter stating that were suspended, "pending the completion of an administrative compliance investigation into certain possible inappropriate and or unlawful activities in which you appear to have been involved." Caremark officials said that the current investigation into the Fowlers is not related to their lawsuit against the company, but comes from information received by an employee. However, Leonard said, "Caremark won't tell us what the subject matter of the investigation is."
There are no national statistics on returned drugs, and there is no federal law governing the resale of returned prescription drugs, according to the Journal. A spokesperson for FDA said that the agency "generally discourages the reuse of drugs that leave the control of the pharmacy." In addition, she noted that FDA policy states, "A pharmacist should not return drug products to his stock once they have been out of his possession. It could be a dangerous practice for pharmacists to accept and return to stock the unused portions of prescriptions that are returned by patrons, because he would no longer have any assurance of the strength, quality, purity or identity of the articles." In addition, PBM Medco Health Solutions and pharmacy chains Walgreens and CVS all have policies against reselling returned medications, the Journal reports. "The problem is you don't know where the patient has stored it," Carmen Catizone, executive director of the National Association of Boards of Pharmacy, said, adding that even with sealed bottles, exposure to "extreme temperatures could cause a chemical reaction" that would make a medication either ineffective or dangerous (Martinez, Wall Street Journal, 4/5).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.