Latest Developments in Massive Pharma Lawsuit

(Fall 2018) In the past several newsletters, we’ve been following the upcoming litigation on more than 800 lawsuits lodged against companies involved in the opioid drug industry. Below we’ve gathered the latest updates in this mega-suit.

Judge Dan Polster of the U.S. District Court in Cleveland, Ohio, was asked in June to decide whether government information containing multiple years’ worth of prescription opioid shipments could be released. This data is central to the cases brought against drug manufacturers, distributors and sellers of opioids by a multitude of local government entities that claim these defendants drove increasing addiction and overdose rates. (To realize the scope of the U.S. opioid crisis, consider that the epidemic took the lives of over 42,000 Americans in 2016 alone.)

The federal government permitted the shipment data to be released strictly to plaintiffs’ counsel in the case. However, journalists at the Washington Post and HD Media, the parent company of the Charleston Gazette-Mail in West Virginia, called for the information’s public release.

In late July, Judge Polster determined that information on prescription opioid distribution locations would not be released to the public. His ruling is based on the fact that the data holds proprietary business information and is excluded from federal Freedom of Information Act requests.

Polster will preside over the large lawsuit, which includes Cuyahoga and Summit Counties and the City of Cleveland among its plaintiffs. Additionally, he is instrumental in the process trying to reach a nationwide settlement that could result in the drug industry making monetary reparations and altering its conduct.

Mike DeWine, Ohio’s Attorney General, may be adding to the suit. He is ramping up his inquiry into the practices of pharmacy benefit managers (PBMs). The action is likely to result in a case against the businesses that handled drug benefits for Medicaid and similar health care entitlements sustained by tax dollars. DeWine’s office has been looking into PBMs and their deals with organizations in the Buckeye State since late 2017.

Recent analysis shows that—in a single year—PBMs invoiced Ohio $223.7 million more for prescription drugs than they repaid pharmacies to fulfill the prescriptions. The almost 9% difference results in millions retained by CVS Caremark and Optum Rx which manages one of Ohio’s Medicaid managed-care plans.

The role of PBMs is to bargain with drug manufacturers and handle drug claims. The study cited above states that PBMs charges for a prescription should run between 90 cents and $1.90. However, CVS Caremark charged Ohio approximately $5.60 per prescription, while Optum invoiced $6.50, resulting in charges that are 300% to 600% above those anticipated.

In response, a representative for CVS Health commented that Ohio’s Department of Medicaid recently noted that PBMs allow Ohio to conserve $145 million each year. The Ohio Association of Health Plans also claims that Ohio’s Medicaid outlay is 13% less than the cost of states that do not employ a PBM.

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