And that means an increased rate of recovery in the years to come.
Pamela Coyle Brecht is a partner at Pietragallo, Gordon, Alfano, Bosick & Raspanti in Philadelphia.
Her focus — pharmacy benefit managers. The big three are — Express Scripts, CVS Caremark, and United Health.
In a pathbreaking case, Brecht represents industry insider Anthony Spay who alleged that one of the big three pharmacy benefit managers – CVS Caremark – engaged in a nationwide scheme to defraud the Part D program. Spay survived a motion to dismiss, but Caremark was granted summary judgment. The case is now on appeal to the Third Circuit.
Spay is one of the first whistleblowers to allege Part D fraud against a pharmacy benefit manager.
The Spay case was filed in 2009. Spay’s company was hired to audit the Part D claims processed by Caremark on behalf of Medical Card System, a Puerto Rican health insurance company.
After a 2007 merger, CVS and Caremark have served as a Part D Sponsor, pharmacy benefit manager, and retail pharmacy in the Part D program.
In the course of his company’s audit, Spay alleged that he found that Caremark was improperly adjudicating and submitting claims for prescriptions that were not allowed under the Part D Program.
Spay alleged that Caremark improperly dispensed gender-specific drugs to the opposite gender, failed to apply “maximum allowable cost” pricing to prescription drugs, billed for drugs with expired and obsolete National Drug Code identifiers, billed for prescriptions that contained false physician identifiers, dispensed prescription drugs without prior authorization, and billed for quantities of supplies of drugs that exceeded approved limits.
Spay also alleged that these practices were part of CVS Caremark’s nationwide practice.
Brecht says that the pharmacy benefit managers are the key players in the Part D program.
“Most people don’t realize that the central player in the Part D program is the pharmacy benefit manager,” Brecht told Corporate Crime Reporter in an interview last week.
Who are the actors in the Part D program?
“You have the sponsor — the insurance company. The insurance company contracts with the pharmacy benefit manager — which actually provides the pharmacy benefit service. That benefit includes not just the pill, but those bundles of services that go with it. Someone has to dispense the pill, but also make sure that the medical care is being taken care of — that the person has a prescription, that the drug is proper for this person, that there is no gender contraindications, that it is not going to interact with other drugs they are taking, that they didn’t get the same prescription filled at another pharmacy yesterday. All those services are handled through the pharmacy benefit manager. The pharmacy benefit manager contracts with the pharmacies on behalf of the sponsors — the insurance companies.”
“CMS has looked into Part D at the pharmacy level. There have been some newsworthy cases of the government conducting stings at pharmacies to prevent Part D drugs from ending up on the black market. There was some attention being paid to that level of fraud. But little attention is paid to the pharmacy benefit managers.”
Why aren’t the whistleblowers coming out of these PBM companies?
“There are only a few major PBMs and people value their jobs. You don’t want to be knocked out of the marketplace. Our whistleblower happened to have his own business where he actually audited PBMs. Because they are so powerful, there really aren’t any PBM sponsors who can take on the PBMs. It’s a powerful player in the Part D program. You and I don’t know what cases are currently under seal.”
Do you sense that we will be hearing more about these cases?
“I do because there has been a lot of focus on drug prices. One of the issues that we had in our CVS Caremark case was whether a Part D sponsor has to provide a negotiated price. And the question became — what is that price? A sponsor has an obligation to pass on negotiated prices to the beneficiaries. In Medicaid the government is entitled to the best price. Perhaps that will be coming into Part D — I don’t know. But there is a lot of focus on prescription drug prices right now.” “Who would know whether the patient is getting the negotiated price? Only if you know what the contract says and also what is the price charged by the pharmacy would you know whether the patient is getting the negotiated price.”
“The key to the Part D program? The insurance company sponsors have to make certain promises to the government. For every drug dispensed, the insurance company sponsor has to submit what is called a PDE — prescription drug event. And that data has to be true, accurate and complete to the best of the sponsor’s ability.”
“But there is another set of promises made by the pharmacy benefit managers. They help create the PDE claims. They have to certify that they are true, accurate and complete. And the cost of Medicare drugs is part of the PDE. In exchange for getting the money, the major players are supposed to submit true, accurate and complete information to the government.”
“There haven’t been many challenges to the truth of those PDE claims. Unless you can see what the pharmacy is dispensing and can compare it to the PDE submitted to the government, you wouldn’t know whether those are true, accurate and complete.”
“That’s why there are very few Part D False Claims Act cases that deal with the sponsor or the PBM. There are more cases brought against pharmacy fraud — that controlled substances are being dispensed without a prescription — that kind of thing. It’s easier to know about that.”
There is a lot of fraud and little enforcement?
“Correct. There is not very much transparency at the PBM area at all. And you have to remember that Part D came into existence January 1, 2006. It takes a long time for a False Claims Act case to percolate out from under seal and then get to the motion to dismiss stage.”
Pamela Coyle Brecht has been invited to speak at this winter’s ACI’s False Claims and Qui Tam Enforcement program, taking place on January 27-28th at the Park Lane Hotel in NYC. This advanced forum on False Claims and Qui Tam Enforcement is designed to provide up-to-date guidance and analysis from the most respected false claims… Read more »Read More
Pietragallo Gordon Alfano Bosick & Raspanti, LLP is recognized in the 2018 annual list of “Top 100” verdicts, released by VerdictSearch and ALM. The firm’s record breaking $51,208,578 verdict in Lutz v. Health Diagnostics Laboratory, Inc. is ranked as #39 on this year’s list of highest verdicts throughout the nation and comes in at #2… Read more »Read More
Joseph L. Gordon will be presenting “OSHA’s Ten Most Common Violations – An Insider’s Perspective on Easy Solutions to Overlooked Hazards” at The Pennsylvania State Council of SHRM’s 2019 State Conference in State College, PA. Joe will be a co-presenter with Nicholas DeJesse, an Assistant Regional Administrator with OSHA. For more information, including how to attend… Read more »Read More
Marc Stephen Raspanti will be speaking at a False Claims Act Enforcement Roundtable on September 19, 2019 from 4:00-6:30pm in Miami, Florida. This event is being co-hosted by Pietragallo, Morgan Lewis, the Women’s White Collar Defense Association, and the American Bar Association’s Qui Tam Subcommittee for a False Claims Act/Qui Tam Roundtable, “Florida Style.” The discussion… Read more »Read More