Oregon Department of Justice

Attorney General Hardy Myers today announced a settlement filed in Marion County Circuit Court with Express Scripts Inc., one of the nation's largest pharmacy benefits management (PBM) companies. The agreement is part of a 29-state investigation and settlement.

PBMs enter into contracts with employer and governmental health plans to process prescription drug claims for drugs provided to patients enrolled in those health plans; negotiate with drug companies to obtain discounts; negotiate discounts with participating retail pharmacies to provide dispensing services; and dispense drugs to patients through PBM-owned mail order pharmacies. In the thirty years since the first PBMs appeared, their services have evolved to include complex rebate programs, pharmacy networks, and drug utilization reviews.

Today's settlement, in the form of an Assurance of Voluntary Compliance (AVC), asserts that Express Scripts engaged in deceptive business practices by failing to act in a manner consistent with its representations to consumers and employers about its pharmacy benefit management services. In particular, Express Scripts may have overstated the cost benefits of switching to certain preferred medicines.

As part of the settlement, Express Scripts agrees to make a series of disclosures to consumers, doctors and employers about the company's business practices. Express Scripts will pay $9.3 million to the states and up to $200,000 in reimbursement to patients who incurred expenses related to certain switches between cholesterol-controlling drugs. Oregon will receive a total of $176,470 from this settlement; at least $111,470 is to be spent for the benefit of low-income, disabled or elderly consumers of prescription medications, to promote lower drug costs for state residents, and educate consumers about the cost differences among medications. The remaining $65,000 will be deposited into the state's Consumer Protection and Education Fund.

"The cost of drug prescriptions is on the forefront of consumers' minds, particularly seniors and those with ongoing medical needs. Consumers must have all of the information necessary to make wise purchasing decisions," stated Myers. "Today's agreement holds Express Scripts accountable for the information it provides to Oregon consumers."

The settlement generally prohibits Express Scripts from soliciting drug switches when:

• The net drug cost of the proposed drug exceeds the net drug cost of the originally prescribed drug;
• The originally prescribed drug has a generic equivalent and the proposed drug does not;
• The originally prescribed drug's patent is expected to expire within six months; or
• The patient was switched from a similar drug within the last two years.

The settlement requires Express Scripts to:

• Inform patients and prescribers what effect a drug switch will have on a patient's co-payment;
• Inform prescribers of Express Scripts' financial incentives for certain drug switches;
• Inform prescribers of material differences in side effects or efficacy between prescribed drugs and proposed drugs;
• Reimburse patients for out-of-pocket expenses for drug switch-related health care costs and notify patients and prescribers that such reimbursement is available;
• Obtain express, verifiable authorization from the prescriber for all drug switches;
• Inform patients that they may decline a drug switch and the conditions for receiving the originally prescribed drug;
• Monitor the effects of drug switches on the health of patients;
• Adopt a certain code of ethics and professional standards;
• Refrain from making any claims of savings for a drug switch to patients or prescribers unless Express Scripts can substantiate the claim; and
• Inform prescribers that visits by Express Scripts' clinical consultants and promotional materials sent to prescribers are funded by pharmaceutical manufacturers, if that is the case.

Today's resolution marks the third settlement Oregon has entered into with pharmaceutical benefits managers. In 2004, Oregon and 19 other states settled with Medco Health Solutions, Inc., the world's largest pharmaceutical benefits manager, and in February of this year, 28 states joined Oregon in a settlement agreement with Caremark Rx, LLC, another of the world's largest pharmaceutical benefits managers.

The other states participating in today's settlement with Express Scripts are: Arizona, Arkansas, California, Connecticut, Delaware, District of Columbia, Florida, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nevada, New Mexico, North Carolina, Ohio, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Vermont, Virginia and Washington.

Information on this settlement or about consumer information in general is available by calling the Attorney General's consumer hotline at 503-378-4320 (Salem area only), 503-229-5576 (Portland area only) or toll-free at 1-877-877-9392. DOJ is online at www.doj.state.or.us.