We read about lawsuits against corruption in the health services industry, but where are the benefits to consumers? Well, here's what I make of it.
Sorting out the stakeholders: In 2004, employer plans, where consumers select from employer provided alternatives for health insurance, health insurance plans from multiple states formed a CLASS and sued Express Scripts, a prescription drug plan contractor. Plan beneficiaries (that would be consumers) were included, so how could consumers do anything but root for a settlement in favor of the big plans suing on their behalf and of course, on behalf of themselves.
The Allegations: What Express Scripts was said to have done: Well, it was simple, they made their own deals and got their own discounts on various drugs and then pushed plans and beneficiaries (that would be consumers) to use, switch to, and co-pay for these drugs at the higher cost, not disclosing the discounts and pocketing that profit. And while they made these deals, the savings they negotiated on the cost of such drugs was not disclosed but instead, health insurance plans were expected to reimburse a higher cost. Simply put: If Express Scripts got a certain med for $5 a dose after negotiating a "deal", they charged the employer the $7 a dose (the going rate) for the med without disclosing the lower cost. This was accomplished through some sort of price spreading system where the actual cost of an individual med was buried across the cost of several.
What's the problem with that? Well, first, a breach of fiduciary duty, after all, Express Scripts was supposed to be providing benefits for health plans and their beneficiaries, not the drug companies and themselves. They weren't passing on their negotiated deal savings to the plans and beneficiaries, not okay.
Second, of course they preferred that consumers use the drugs that gave them that extra cash.
So plans reimbursing for meds that express script preferred because they had one of these back room deals going paid more for prescriptions, consumers were probably manipulated into use of one drug over another (the one with the price spread scam in place) and as with everything else, the increased cost of "coverage" of medications, was likely incorporated into one of the many justifications used to charge consumers MORE for their health insurance.
Well, what happened? How much are we getting back? Will this company go out of business for its choice to engage in this conduct? This was a pretty big deal, 28 states worth of health insurance plans and beneficiaries were involved after all, that's a lot of fraud?
What happened: A settlement was reached with the 28 states worth of health insurance plans on behalf of themselves and don't forget the ones actually taking the drugs chosen by the plans based on how much money they could get...the consumers.
$9.5 million, that's it. And how is it to be divided? What will consumers who were pushed to switch into drugs based on profits for Express Scripts get? Are you ready...UP TO....$25.00 each.
And state officials in the states that have been ripped off by the back room deals? They are publicly BRAGGING that Express Scripts has learned its lesson, that it will do better at informing its customers...blah blah blah. Oh yeah, Express Scripts DID inform the public that it had already planned for the settlement so that its profits will be unaffected...yup, it's stock went up.
Okay, so the stakeholders: Health insurance plans get money from Express Scripts to cover the monies they paid for an artificially higher price on cholesterol drugs than they would have if they'd been informed of the actual price paid by Express Scripts.
Politicians get to brag that they showed them, Express Scripts won't mess with us again.
Express Scripts gets to pay $9.5 million out which apparently will not affect its bottom line.
And the boots on the ground consumer, who takes the drugs which are being prescribed based on these back door deals and pays for the insurance that overpays for these drugs, well, they get UP TO $25 back, not even enough to buy a share of Express Script stock.
