Medco Pays $29 million for cheating customers, but FCA Issues Remain Unaddressed
Medco Health Solutions, the nation's largest pharmacy benefits management and mail-order pharmacy company, has agreed to start telling patients, doctors and employers about the huge annual rebates it received from drug manufacturers for promoting their products. In addition, Medco has said it will stop switching customers from their prescribed medicines to more expensive versions in order to improve the corporate bottom line. One of the most common drug switches being made by Medco was from Pfizer's Lipitor to competing Zocor, made by Merck & Co., Medco's parent until it was spun off last August.

Medco handles prescription coverage for more than 62 million Americans through some 55,000 retail pharmacies and a dozen mail-order pharmacies.

Medco was accused of "unfair or deceptive acts and practices" that violated the trade practices laws of the 20 states. As part of the settlement, Medco will pay $29 million to the states, and also change the way it operates. >> To read the 20-state Medco consumer complaint settlement

The 20-state settlement very explictly does NOT settle either Federal or State False Claims Act cases. Medco's liabilities in those cases is likely to be astronomical if the charges are upheld, as the company faces a laundry list of serious charges. Among them:

• Cancelling, deleting and destroying patients’ mail order prescriptions so that Medco could avoid penalties for its repeated delays in filling and mailing patient prescriptions;

• Mailing prescriptions to patients with less than the number of pills ordered and paid for (“shorting”), and charging both patients and health plans as if they had dispensed the full amount;

• Creating false records showing that physicians had been contacted to discuss the proper drug, or the proper dosage or dispensing instructions, when no such contact had been made;

• Creating false records showing that physicians had been contacted to discuss the risk of adverse drug interactions for a patient, when no such contact had been made;

• Intimidating and coercing pharmacists in order to certify new prescriptions for filling without direct contact with the treating physician, when the professional judgment of the pharmacist was that a call was required;

• Making false statements to patients that mail order prescriptions had not been received, when in fact the prescription had been received and then cancelled in order to appear to meet contractually required turnaround times;

• Billing the United States and patients for prescriptions not authorized by law to be filled;

• Making false statements to the United States during the investigation of Medco’s illegal conduct;

• Changing prescriptions based upon misleading or false information provided to treating physicians;

• Making false statements to the Blue Cross Blue Shield Association about compliance with contract requirements that prescriptions be mailed within so many days of receipt;

• Inducing physicians to authorize switching of prescriptions from lower to higher cost medications while representing that the switch was for the purpose of reducing prescription costs for the health program;

• Favoring Merck drugs over other manufacturer’s drugs in switching programs, even when the Merck drugs were more expensive;

• Failing to comply with state laws requiring appropriate drug utilization review by a pharmacist and consultation with the treating physician where there is a potential for harmful interaction among drugs prescribed for a patient;

• Fabricating records of calls by pharmacists to physicians;

• Failing to call physicians for clarification, as required by governing law, when the prescription received by the pharmacist is ambiguous.

>> To read the amendment Medco complaint (PDF date 12-09-03)