Drug pricing lawsuit proceeds against Cigna as lawmaker calls for a closer look at Express Scripts deal

A federal judge ruled that allegations Cigna “intentionally sought to charge excess amounts for prescription drugs" were plausible enough to move forward. (Pixabay)

A class-action lawsuit alleging Cigna overcharged members using artificially inflated prescription drug costs will move forward as the insurer looks to close its deal with Express Scripts.

Earlier this week, a federal judge in Connecticut ruled (PDF) that the bulk of the claims against Cigna could proceed. A complaint filed by several members in October 2016 accused the insurer of violating the Employee Retirement Income Security Act (ERISA) and the Racketeer Influenced and Corrupt Organizations Act (RICO) by charging members more than 10 times the amount the insurer paid the pharmacy for certain drugs.

The plaintiffs allege Cigna did this by requiring pharmacies to collect a higher copay from patients and then “clawed back” the difference between the contracted fee and the copay. In one instance, the plaintiffs alleged Cigna paid the pharmacy $1.75 for a blood pressure medication and then collected $18.25 from the patient—the “spread” between the contracted payment and the $20 copay charged to the patient.

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RELATED: Cigna-Express Scripts deal a win for drug price transparency, care quality, but raises competition concerns

The complaint names OptumRx, a pharmacy benefit manager owned by UnitedHealth Group, and Argus Health Systems Inc., both of which contracted with Cigna to oversee prescription drug benefits. 

U.S. District Judge Warren Eginton wrote the complaint plausibly alleges Cigna “intentionally sought to charge excess amounts for prescription drugs and that it required the pharmacies to conceal from the insureds the amounts of the prescription drug costs.”

The case moves to the discovery phase as Cigna looks to close its $67 billion deal with Express Scripts, the largest pharmacy benefits manager in the country. On Wednesday, Rep. Frank Pallone Jr., D-N.J., requested a congressional hearing to review Cigna’s acquisition, along with the CVS-Aetna deal, valued at $69 billion.

RELATED: CVS, Aetna say their merger won't be anticompetitive, but some consumer advocates are skeptical

In a letter (PDF) to Rep. Greg Walden, R-Ore., Pallone acknowledged widespread consolidation across the healthcare industry, but argued the scale of the current mergers “should be thoroughly scrutinized” by the House Committee on Energy and Commerce. He added that Express Scripts oversees drug plans for more than 80 million Americans.

Representatives from CVS and Aetna have already made their case before Congress, arguing that the merger would not restrict services and costs savings would be passed on to members. But consumer advocates worried that those promises would be unfulfilled if the merger is approved. Earlier this week, shareholders at both CVS and Aetna voted to approve the deal.

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