Pharmacy Benefits Management companies (PBMs)

CVS Caremark accused of violating patient privacy

Anne Zieger — Mon, 17 Nov 2008 11:21:02 -0500

A few weeks ago we told you that the cost of diabetes care had skyrocketed in recent years. Now pharmaceutical benefits manager CVS Caremark is accused of doing their part to make the trend worse.

Labor union group Change to Win (CTW) has accused the PBM of sending letters to doctors encouraging them to prescribe a more expensive diabetes drug, Januvia, to their diabetic patients. CTW is concerned not only about the increased cost to patients, but also the potential violation of patient privacy rights.

CVS Caremark determined which of their patients were likely diabetic based on prescription drug claims that it had handled. Merck apparently paid CVS to send out the letters, but claims that it never saw any personal patient information. CVS, meanwhile, says that they would never force changes to patients' prescriptions, but rather are just making doctors aware of the possible treatments. The final decision lies with the doctors.

To learn more about the accusations:
- read this Kaiser piece

Express Scripts clients being extorted, too

Anne Zieger — Thu, 13 Nov 2008 08:52:38 -0500

Last week, Express Scripts broke the news that someone was threatening to extort them for an undisclosed amount. The extortionist said that if Express Scripts didn't pay up, they would release members' personal information. Now some of the pharmacy benefit manager's clients are also being extorted, in letters that are reportedly similar in style to the original extortion letter.

Express Scripts has reported the letters to the FBI and has been working with them to attempt to discover who is responsible. The PBM is also offering a $1 million reward for "the person or persons who provide information resulting in the arrest and conviction of those responsible for these criminal acts."

In case there was any question that healthcare organizations needed to fight identity theft just like any other creditor, this case should provide an answer: a resounding yes.

To learn more about the extortion efforts:
- read this Modern Healthcare piece (reg. req.)

SPOTLIGHT: Settlements between PBMs, states not tough enough

Wed, 04 Jun 2008 06:59:52 -0400

Recently, the industry has seen a string of cases in which pharmacy benefit managers have agreed to fork over settlements over allegations of bad behavior. Most recently, this includes the instance in which Express Scripts struck a $9.5 million agreement with 28 states over its attempts to steer patients into brand name drugs. However, these settlements are nowhere near tough-enough to deter erring PBMs from continuing with crooked practices, argues Los Angeles Times columnist David Lazarus. He argues that it will take "stronger medicine" to turn the industry around. Article

Express Scripts, CVS turn up Caremark rhetoric

Tue, 16 Jan 2007 19:01:35 -0500

In the newest attack in the increasingly ugly battle for control of Caremark Rx, rival PBM Express Scripts--currently the spurned suitor--called a dividend offer from drugstore chain CVS a "desperate attempt to save a flawed transaction.". Following yesterday's offer by Express Scripts to take over Caremark, valued at $24.8 billion to $25 billion, depending on whose numbers you believe, CVS sweetened its bid by offering a special cash dividend of $2 per share to Caremark shareholders, bringing the value of its offer to about $23.3 billion. Caremark's board previously accepted an all-stock merger plan from CVS.

For more details:
- read the latest developments from the St. Louis Business Journal

Related Article:
Express Scripts-CVS battle for Caremark heats up. Report

Express Scripts-CVS battle for Caremark heats up

Mon, 15 Jan 2007 19:01:36 -0500

Express Scripts is moving ahead with its $25 billion plan to take over rival PBM Caremark Rx, announcing Tuesday that it has begun offering cash and shares to Caremark shareholders, despite being rebuffed by the Caremark board last week. That move follows a lawsuit by a large institutional investor that charges Caremark insiders with putting personal enrichment ahead of shareholder value. In a suit filed last month but not reported until Friday, the Louisiana Municipal Police Employees Retirement System, said the PBM's board members ignored the Express Scripts offer in order to protect executive jobs and perks in a proposed merger with CVS.

Although the $21.2 billion CVS merger proposal is worth significantly less than the Express Scripts bid, a $675 million breakup fee effectively prevents Caremark from pulling out of the CVS deal, the suit says. "Our main gripe is this was a sweetheart deal that gave the insiders a lot more than the outsiders," the pension board's attorney, Stuart Grant told the Associated Press. Among other allegations, Grant said that Caremark boss Edwin "Mac" Crawford personally would receive $48 million in stock, severance pay and consulting fees from the merger, which would make him chairman of the combined company. Also, Crawford's son has been promised a job if the CVS deal goes through, the AP reports.

For more:
- check out this MarketWatch report on the Express Scripts offer
- read about the lawsuit in this AP article

UnitedHealth Group faces criminal inquiry

Wed, 17 May 2006 20:01:39 -0400

Prosecutors in Manhattan have launched a criminal investigation into stock-option grants to senior executives at UnitedHealth. The Minnetonka, Minnesota-based health insurer also said the IRS has asked for access to documents, suggesting that an investigation into tax issues may be a possibility. For weeks, the consensus has been that it is unlikely that CEO William McGuire will resign as a result of the affair. Criminal charges could change things in the blink of an eye. UnitedHealth Group shares fell slightly in morning trading on the news, before recovering.

- read this article from The Wall Street Journal (sub. req.)

PLUS: Omnicare, a PBM specializing in the nursing home market, filed a lawsuit against UnitedHealth charging that the health plan "conspired" with PacifiCare while the two companies were negotiating Medicare Part D contracts. Article

ALSO NOTED: Kaiser reverses position on transplants; Rhode Island leads nation in e-prescribing; and much more...

Tue, 09 May 2006 20:00:50 -0400

> Hospitals in Pennsylvania, including the University of Pittsburgh Medical Center network, are providing more uncompensated care than last year, a local industry trade group reports. Article

> Blue Cross of Massachusetts will double the amount it spends on pay for performance programs--with spending rising to $189 million in the state. Article

> Kaiser Permanente said it will pay for transplants for patients at outside hospitals, as health officials in California launched an investigation into the company's troubled kidney transplant program. Article

> Rhode Island doctors lead the nation in e-prescribing, according to a new study released this week by SureScripts. About 20 percent of doctors in the state have access to e-prescribing networks. Article

> FierceHealthcare editor Matthew Holt performs a detailed analysis of last weeks RAND study of the individual insurance market, and concludes that the study didn't really look at the right things. Blog

> Barbara Martinez dives into the murky waters of the PBM market and discovers that they sell generic drugs to their clients at very profitable margins. Article

> Fortune looks at how the VA health system transformed itself into one of the most wired and cost-effective health systems. Article

And Finally... Russ Feingold gives his views on health reform: Something, anything, must be done. Article

Insurers face tough day on Wall Street

Wed, 26 Apr 2006 20:01:39 -0400

Today's earnings announcements from health plans and insurers don't look too bad. WellPoint reported a 20 percent surge in profits yesterday, a gain that the company attributes to an increase in membership and decreased medical costs. Aetna also posted good earnings, with first quarter profits up 3.2 percent, but reported a first quarter medical cost ratio of 79.4 percent in its main commercial business. That was up from 77.9 percent a year earlier. Meanwhile, PBM Express Scripts had first quarter earnings of $104.7 million compared with $85.3 million for the same period a year ago.

Wall Street wasn't having any of it. Aetna's stock was down over 20 percent today as the company's CEO Jack Rowe hands over the reins to Ron Williams and CFO Alan Bennett makes plans to retire in 2007. Express Scripts stock is down nearly 10 percent, and the rest of the health plan and PBM sector is down heavily too.

- read the article about WellPoint from the Los Angeles Times
- see this Houston Chronicle article about Aetna's stock slide
- read this article from MarketWatch for more about Express Scripts

ALSO NOTED: Louisiana AG's investigation said to be still active; Ekos wins $26M in VC; and much more...

Tue, 21 Mar 2006 19:00:50 -0500

> The Tenet Shareholder's Committee emailed evidence that suggests that Louisiana AG Charles Foti's investigation of the company's role in the deaths at Memorial Medical Center is still ongoing. Blog

> Colorado lawmakers rejected a law that would have required PBMs to open their books and disclose ownership interests. Article

> Medicare will automatically enroll 1.2 million low-income seniors into Part D. Release

> First Consulting has a study out looking at the trend of health plans using technology to track physician performance and steer members to higher performing "tiers." Article

> Ekos said it has won $26 million in venture capital financing. The Seattle-area company is behind a system that uses a combination of ultrasound and drugs to target blood clots in the extremities. Article

> PracticeXpert said it had acquired physician billing services unit from RevCare. Article

> A Yale Medical School study has found patients who are treated for heart attacks or heart failure at top hospitals boost their chances of surviving considerably. Article

> The GAO says that the Defense Department and the Veterans Administration should better share healthcare IT resources. Article

> Medical City Dallas opened a $90 million expansion, complete with separate emergency rooms for kids and adults. Article

And Finally... Are they customers? Consumers? Or just possibly--patients? Peter Salgo tackles the changing realities of healthcare in a New York Times Op-Ed. Article

Analyst questions UnitedHealth outlook

Mon, 13 Mar 2006 19:01:35 -0500

After years of excellent numbers, some critics are starting to wonder if things are about to take a turn for the worse at UnitedHealth. Goldman Sachs analyst Matthew Borsch reiterated his underperform rating for the company this weekend. Borsch says problems at recently acquired PacifiCare, "market noise on deteriorating customer service" and questions about corporate governance are "red flags" that should not be taken lightly. Borsch notes that PacifiCare earnings in California have dropped more than 50 percent over the last quarter, according to state insurance department records. The article is by The Street.com's Melissa Davis, who has not been shy to talk about potential problems with health insurers and PBMs, while investors have largely ignored her and continued to drive those insurers stock prices higher over the past two years. Maybe this time it's different.

- see this article from the Street.com