Caremark Settles State Accusations of Drug Switching

This posting was written by Jeffrey May.

Caremark Rx, L.L.C., one of the nation's largest pharmacy benefits management companies, has agreed to settle charges brought by 28 states and the District of Columbia that it violated state consumer protection statutes by encouraging doctors to switch patients from originally prescribed brand drugs to different brand name prescription drugs.

As part of the settlement, Caremark will pay $38.5 million to the states and up to $2.5 million in reimbursement to patients who incurred expenses related to certain switches between cholesterol-controlling drugs. The settlement would also require Caremark to change its business practices.

Caremark allegedly represented to doctors that switching drugs would save money; however, it failed to adequately inform doctors of the actual effect this switch would have on costs to patients and health plans. Caremark did not clearly inform its clients that money Caremark earned from the drug-switching process would be retained by Caremark and not passed directly to the client plan, according to the states.

In addition, Caremark purportedly restocked and re-shipped previously dispensed drugs that had been returned to Caremark's mail order pharmacies and failed to disclose to plan participants the practice.

Under the settlement, Caremark has agreed to refrain from soliciting drug switches when the net cost of the proposed drug exceeds the net cost of the originally-prescribed drug or the cost to the patient will be greater than the cost of the originally prescribed drug.

Soliciting drug switches would also be prohibited when the originally prescribed drug has a generic equivalent and the proposed drug does not or when the patient was switched from a similar drug within the last two years. The settlement would also require Caremark to inform patients and prescribers about the effects of a drug switch.

Complaints and consent decrees were filed in state courts across the country on February 14, 2008. The states participating in the settlement are: Arizona, Arkansas, California, Connecticut, Delaware, Florida, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nevada, New Mexico, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Vermont, Virginia, and Washington, and the District of Columbia.