Fraud, deceptive Practices

"What we've seen in all these [PBM] claims of we've going to reduce costs, we're going to reduce costs, is the prescription prices keep going up. The sponsors of the plan keep paying more. The consumers are paying higher co-pays. The pharmacies are being paid less. So where's the money going?" – Pennsylvania pharmacist Joe Lech, RPh testifying before Congress, Sept. 2011.

The major pharmacy benefit managers, or PBMs, have paid $370 million to settle claims of deceptive practices or fraud, with other cases pending.

Plaintiffs have included the attorneys general of dozens of states, unions, private industry, pharmacists and others. The specific charges relating to fraud and deceptive practices have included:

  • Switching patients to more expensive drugs to pad profits;
  • Shipping or billing for medication that was never ordered;
  • Breaching contractual/fiduciary responsibilities;
  • Soliciting and receiving kickbacks from pharmaceutical manufacturers;
  • Inflating the costs of generic drugs; and
  • Cancelling prescriptions.

For more, see Spread Pricing or Rebate Pumping.

"The health benefit provider, however, often has no idea that a PBM may not be working in its interest. This lack of awareness is the result of the fact that there is little transparency in a PBM's dealings with manufacturers and pharmacies." – First Circuit Court of Appeals, 2005.