PBMs: PCS and Merck-Medco Subpoenaed by HHS
The HHS Office of the Inspector General has issued administrative subpoenas to PCS Health Systems Inc. and Merck-Medco Managed Care LLC -- two of the largest pharmacy-benefit management companies (PBMs) -- as part of a "broad federal investigation of drug-marketing practices," the Wall Street Journal reports. Although PCS received its subpoena in December and Merck-Medco got its last summer, the issue became public after Schering-Plough Corp. disclosed recently that it had received a subpoena and indicated that other drugmakers and PBMs had received them. The investigation is supposedly "focusing on whether drug makers provided government health plans, such as Medicaid, with the same discounts and rebates given to PBMs and to large private health plans." Under federal law, manufacturers are required to disclose to the government the average wholesale price for a drug and the lowest price at which it sells. James Sheehan, who is overseeing the investigation, said, "There are many concessions given by manufacturers to PBMs and to health plans that are not reported to the Medicaid program."
Sheehan said he also is investigating whether patients "are improperly switched to similar drugs than the ones prescribed by their doctors based on the size of the rebate," a practice which would violate anti-kickback laws if they involve government health plans. Should such a practice involve private insurers, it is still illegal under federal fraud statutes. Sources said that the investigation will examine the financial relationships PCS and Merck-Medco have with health plans to favor drugs from certain manufacturers. PCS spokesperson Dale Thomas said, "The document request received by PCS seeks general information about our programs and how they operate. There have been no allegations of wrongdoing." Merck spokesperson John Bloomfield said, "We're actively cooperating with the inquiry to explain the nature of our business. We conduct our business in accordance with all applicable local, state and federal laws and consumer regulations" (Cloud, 3/7).