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News of PBM Litigation


In 1997, Attorney Linda Cahn (Pharmacy Benefit Consultant’s President and CEO) filed the first class action litigation against Pharmaceutical Benefit Management companies (”PBMs”).Since that date, numerous copy-cat lawsuits by other lawyers have been filed in federal and state courts across the country, while Attorney Cahn has continued to file cutting-edge litigation on behalf of new corporate clients and unions. Meanwhile, Cahn has repeatedly met with federal and state prosecutors, spurring them to initiate litigation.

To understand the allegations - and successes - of prosecutors’ lawsuits is to understand how your company can also recover millions of dollars in wrongful claims or lost savings. Accordingly, PBC believes you should understand the following critical information about government lawsuits against PBMs:

  • Federal Litigation Against Caremark/AdvancePCS: The federal government recently settled its lawsuit against AdvancePCS and Caremark for $137.5 million dollars. The settlement resolved the government’s allegation that AdvancePCS had wrongfully manipulated its receipt of manufacturer rebates, and thereby wrongfully deprived certain federal government employee benefit plans of savings. The government’s settlement suggests that all PBM clients should ascertain whether they, too, are owed monies by their PBMs based on wrongful manipulation of manufacturer payments.
  • Federal Litigation Against Medco: The federal government continues to litigate against Medco Health Solutions (”Medco”). The government’s Complaint includes numerous allegations of wrongful conduct, including but not limited to claims that Medco has engaged in wrongful (a) rebate practices; (b) reporting practices; (c) receipt of manufacturer and other third party kickback monies; (d) shorting of prescriptions, etc. Reviewing the federal government’s Complaint may educate your firm about why it is critical that your PBM contract protect against these potential wrongdoings.
  • State Litigation Against Medco: In June 2004, 20 state Attorneys General resolved certain claims against Medco for approximately $30 million. The state prosecutors’ claims primarily concerned Medco’s alleged wrongful practice of switching prescriptions from low-to-high cost drugs. The federal government simultaneously settled its drug-switching claims against Medco. The Massachusetts’ Attorney General also resolved Massachusetts’ claims that Medco had wrongfully manipulated manufacturer rebates and thereby deprived Massachusetts of savings of approximately $6 million. Notably, neither the federal government, nor any state government, released a host of other claims against Medco. Government prosecutors continue to investigate all such claims.
  • State Litigation Against Express Scripts: In 2004, Attorney General Elliot Spitzer filed a lawsuit against Express Scripts, the nation’s third largest PBM, on behalf of a New York state employee benefit plan. Spitzer alleges, among other matters, that Express Scripts wrongfully (a) manipulated manufacturer rebates; (b) inflated the cost of generic drugs; (c) fraudulently deceived doctors to switch drugs; (d) sold data belonging to New York state, etc.