Prescription drug fraud settlement nets $155 million

A prescription drug provider used by federal employee health insurance plans agreed this week to pay the government $155 million to settle multiple claims of fraud.

Medco Health Solutions of Franklin Lakes, N.J., allegedly paid kickbacks to health plans to gain their business, took money from drug manufacturers to favor their drugs and destroyed prescriptions to avoid penalties for delays in filling them.

The U.S. Attorney's office in Philadelphia announced the settlement Monday, several months before the case was scheduled to go to court. Medco did not acknowledge any wrongdoing in the settlement. The Office of Personnel Management, which administers the Federal Employees Health Benefits Program, promised not to bar Medco from future participation.

Medco has contracts with Blue Cross Blue Shield, the Government Employees Hospital Association, the National Association of Letter Carriers, and several other FEHBP insurers to provide prescription drugs. The $155 million settlement involves more than just the FEHBP, though. Medco also provided drugs for the Defense Department's TRICARE health insurance program, and for Medicare.

"Millions of federal employees and Medicare beneficiaries rely on pharmacy benefit managers such as Medco for their prescription drugs," Assistant Attorney General Peter Keisler said. "Hidden financial agreements between [pharmacy benefit managers] and drug manufacturers and health plans…can influence which drugs patents receive, the price we all pay for drugs, and whether pharmacists serve patients with their undivided professional judgment."

This settlement is not the first of its kind for OPM. In January, the agency's inspector general announced several multimillion-dollar settlements for pharmaceutical wrongdoings as part of his semiannual report to Congress. IG Patrick McFarland said he was focusing more resources on prescription drug fraud.

A similar case ended in a $54.6 million settlement from AdvancePCS, another pharmacy benefit manager. OPM's IG claimed that AdvancePCS took money from pharmaceutical manufacturers in return for favorable treatment of its drugs in FEHBP contracts. The government also alleged that the company illegally paid health insurance plans to ensure its selection as their pharmacy benefit manager.

Medco is the second largest pharmacy benefit management company in the country, handling prescriptions for more than 60 million Americans.

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