Nearly 200 independently owned pharmacies are suing OptumRx in St. Clair County, claiming they are reimbursed less for dispensing prescription drugs than retail chain pharmacies.
“Defendant earns exorbitant - and ill gotten - fees by inserting itself between the patients who need prescription drugs, the health plans that pay for the drugs, and the pharmacies (both retail chain, mail order, and independent, such as plaintiffs) who dispense those drugs,” the lawsuits state.
Two separate lawsuits were filed by 33 Illinois pharmacies and 154 out-of-state pharmacies in the St. Clair County Circuit Court against OptumRx Inc., in its own right and as successor by merger to Catamaran Corporation. OptumRx is described as a pharmacy benefit manager, or PBM.
The pharmacies are represented by Keith Short of Keith Short & Associates in Alton and Mark Cuker of Jacobs Law Group in Philadelphia.
The complaints state that the plaintiffs are among approximately 22,000 independently owned pharmacies in the U.S., which are “small-business entrepreneurs, rooted in their communities, who play an essential role in the prescription drug market by offering their customers uniquely personalized service and counseling not provided by large chain pharmacies or mail order pharmacies.”
The plaintiffs allege OptumRx is a wholly owned subsidiary of United Health Corporation, which is the nation’s fifth largest corporation. OptumRx acquired and merged with Catamaran Corporation in July 2015. Following the merger, OptumRx allegedly paid claims using two sets of systems in Illinois and in California and Minnesota.
OptumRx allegedly develops and maintains prescription drug formularies, negotiates rebates and discounts with prescription drug manufacturers and establishes a network of pharmacies to dispense prescription drugs.
“In short, defendant reimburses pharmacies low, charges plan sponsors high, and pockets the difference as profit (spread),” the lawsuits state.
The plaintiffs argue that “only a handful” of pharmacy benefit managers dictate the rates used to reimburse pharmacies for dispensing prescription drugs to patients. OptumRx allegedly controls approximately 25 percent of the national market. The plaintiff pharmacies claim the defendant acts in bad faith “in how it sets the maximum allowable cost (MAC) price it sets for generic drugs.” The MAC is meant to cover the pharmacy’s cost to acquire the drug, according to the complaints.
However, the independent pharmacies claim OptumRx engages in “bad-faith manipulation of reimbursement rates,” causing the plaintiffs to suffer economic losses.
“A below-cost reimbursement is effectively no reimbursement at all,” the lawsuits state.
“Defendant abuses its unbridled price-selling power to drive independent pharmacies out of business,” the lawsuits add.
Specifically, OptumRx allegedly reimburses a pharmacy at a percentage of the average wholesale price of brand name drug prescriptions. For generic drugs, OptumRx allegedly sets its maximum allowable cost prices the lowest.
“Because generics typically made up at least 80 percent of an independent pharmacy’s prescription drug business, defendant’s use of below cost MAC pricing threatens the very existence of independent pharmacies such as plaintiffs,” the lawsuits state.
The plaintiff pharmacies claim OptumRx enters contracts with various health insurance companies to administer and manage prescription drug benefit programs. They allege the defendant operates with “a web of confidential agreements that plaintiffs are never allowed to see, let alone negotiate.”
“Under this veil of secrecy, defendant routinely pays plaintiffs MAC prices that are substantially below the MAC prices defendant pays to defendant’s affiliated mail-order pharmacies and large retail chain pharmacies - for the same drugs dispensed to patients in the same health plan, and at the same time,” the lawsuits state.
The plaintiffs argue that they have “no choice” but to enroll with pharmacy benefit managers because most of their customers are members of health plans.
“Practically speaking, if an independent pharmacy wants to remain in business, it must ‘accept’ the prescription drug coverage plans offered to the pharmacy’s local customer base,” the lawsuits state. “Since defendant has become a dominant force in the market, controlling about 25 percent of the national market, independent pharmacies such as plaintiffs must join defendant’s network, or they will lose much of their customer base.”
The defendant then contracts with pharmacy services administrative organizations (PSAOs” to recruit independent pharmacies to join its network of providers. The plaintiffs claim those contracts are also kept secret.
“Defendant’s entire business model relies on a wall of secrecy, employing a series of confidentiality agreements to conceal the truth about its operations,” the lawsuits state.
Specifically, they claim OptumRx hides how much it is paid by plan sponsors for the prescriptions dispensed to plan members; the amount it collects “between what it receives from plan sponsors and what it pays to plaintiffs”; how much more it pays large pharmacy chains; how much more it pays its own mail order pharmacy; and the brand/generic classification it uses to bill health plans.
The plaintiff pharmacies also claim OptumRx denies at least 95 percent of appeals challenging reimbursements in bad faith.
“Defendant has outrightly rejected the overwhelming majority of plaintiffs MAC appeals, even when the MAC price was below wholesale benchmarks, breaching its own provider manual,” the lawsuits state.
Further, the defendant is accused of engaging in retroactive deductions, or claw-backs, in which OptumRx allegedly deducts money from payments made to the plaintiffs months later.
“Defendant’s retroactive claw-backs serve no purpose other than to satisfy defendant’s greed for additional revenue,” the lawsuits state.
The pharmacies claim the claw-backs “create havoc” with their cash flow and ability to run their businesses.
“The primary reason defendant employs discriminatory practices against independent pharmacies such as plaintiffs is to injure their businesses and destroy competition, such that the favored pharmacies (and defendants) can monopolize the prescription drug industry,” the lawsuits state.
“As a result of defendant’s discriminatory reimbursement practices, hundreds of independent pharmacies have either closed their businesses or sold their pharmacies to the same large retail chain pharmacies receiving the favorable MAC prices from defendant,” they continue.
St. Clair County Circuit Court case numbers 22-LA-662 and 663