Louisiana Attorney General Jeff Landry has sued UnitedHealth Group, claiming that the healthcare and insurance giant has inflated drug charges in the state's Medicaid program by billions.
The suit was filed April 13 in state court, Bloomberg reported, and alleges that the company's pharmacy benefit manager Optum Rx took advantage of the secrecy of the pharmacy supply chain to "needlessly" charge Medicaid billions for prescription drug benefits.
PBMs have been increasingly under the microscope as state regulators examine the role they play in Medicaid. A Supreme Court decision in late 2020 that upheld an Arkansas law regulating PBMs was expected to drive greater scrutiny of their practices in other states.
UnitedHealth's insurance subsidiary UnitedHealthcare is one of several payers that administer the state's Medicaid program. Landry said that Optum had an incentive to jack up drug costs to help UHC meet required medical loss ratio targets for its Medicaid managed care plans, Bloomberg reported.
UnitedHealth Group has maintained that there is a clear wall between UnitedHealthcare and Optum, as Optum services many other payers nationwide. In its rebuttal to the DOJ over its challenge to the company's Change Healthcare acquisition, UHG said that using Optum to help UnitedHealthcare gain an edge over its competitors would be tantamount to "economic suicide" for the Optum business.
UnitedHealth said in a statement to Fierce Healthcare that it will fight the lawsuit.
“We are honored to provide pharmacy benefit services to the Louisiana Department of Health’s Medicaid program that deliver access to more affordable prescription medications for consumers and Louisiana taxpayers," a spokesperson said. "Our services are performed in accordance with State regulations and the Department’s requirements outlined in our contract, and we believe this lawsuit is without merit and will defend ourselves against these unsupported allegations.”
State regulators have filed similar lawsuits against other PBMs across the country. Centene, for instance, paid out more than $1 billion to settle drug overpayment allegations in several states.