Tag: Express Scripts

  • Pharmacy middleman grants huge bonuses for winning business meant to help the poor

    Pharmacy middleman grants huge bonuses for winning business meant to help the poor

    BY:  Ohio Capital Journal

    Medicaid might be a taxpayer-funded health program for the poor, but that doesn’t mean others aren’t getting rich off of it — including employees of a company the state is suing on antitrust grounds.

    Several employees of drug middleman Express Scripts last year raked in bonuses of $750,000 each for getting the business of a managed-care company that depends on Medicaid for the bulk of its business.

    In other words, in addition to their already-high pay, they received bonuses that were 18 times the average American’s annual pay just for landing a contract.  And that contract is with a company that has already paid out $88.3 million to settle claims that it had defrauded the Ohio Medicaid program.

    It might be striking to the average taxpayer that people with huge corporations are profiting so lavishly off of programs for the poor. But one of the Express Scripts employees — who also helped prepare the company for a federal antitrust investigation — said the bonuses were “well earned.”

    Ohio Attorney General Dave Yost in March sued Express Scripts and several other healthcare companies under the Valentine Act — Ohio’s antitrust law — claiming that the companies participate in  “a complex ‘pay to play’ rebate system that, perversely, pushes manufacturers to increase drug prices in order to be placed on, or receive, preferred placement on PBM formularies.”

    As a pharmacy benefit manager, or PBM, St. Louis-based Express Scripts represents health insurers — including parent company Cigna — in drug transactions. It decides which drugs are covered and uses that leverage to extract rebates from drug manufacturers who want to get their products on its “formularies,” or lists of covered drugs.

    Express Scripts also creates networks of pharmacies and it decides how much to reimburse them for the drugs they dispense. And because it keeps much of the data about rebates and reimbursements secret, it’s hard to know how much they’re passing along to insurers and pharmacies and how much they’re pocketing.

    It’s sure to be a lot. Two thirds of Cigna’s $110 billion in revenue last year came from its Express Scripts subsidiary, the PBM’s former president said in a sworn statement in June.

    The executive, Amy Bricker, resigned her post earlier in January to take another with another vast healthcare player, CVS.

    That company owns another huge PBM, CVS Caremark, and between it, Express Scripts and OptumRx (part of UnitedHealth) they control the prescription coverage of more than 70% of the insured people in the United States.

    As part of her sworn statement, Bricker stuck to the company line.

    “As a PBM, Express Scripts’ goal is to reduce the cost of prescription medication for its clients—the Payor Entities,” she said. “As President of Express Scripts, I was responsible for Express Scripts’ relationships with its (client insurance companies) as well as the tools/levers utilized to lower the cost of prescription medications.”

    However, Yost and many others maintain that the big PBMs actually force drugmakers to raise list prices in order to provide ever-growing rebates to PBMs and there’s been some research to support that. And there’s the fact that an investigation found that in 2017, CVS Caremark and OptumRx billed Ohio Medicaid $223 million more for prescription drugs than they paid the pharmacies that had purchased and dispensed them.

    Those claims and others last year prompted the Federal Trade Commission to open a major, ongoing investigation into the big PBMs.

    Bricker said that while she was still president of Express Scripts, one of her duties was to help the company respond to the FTC investigation. But the whole reason she was making the statement centered around another major enterprise she led — acquiring the business of Centene.

    That company, also based in St. Louis, is the largest Medicaid managed-care company in the United States. It acts as health insurer on behalf of states as they administer the federal-state health program for the poor.

    When it acts as insurer, Centene hires PBMs to handle drug transactions. And in that capacity, the company has had its problems in Ohio and elsewhere. Yost sued Centene in early 2021 on claims that it used two of its own PBMs to bilk Ohio Medicaid out of tens of millions.

    Within months, the company agreed to pay Ohio $88.3 million to settle the suit — and it announced that it was setting aside more than $1 billion to settle similar claims with more than 20 other states that hadn’t even sued it. Centene later announced that it would exit the PBM business.

    Centene had used CVS Caremark as its PBM until last November, when it announced that it was moving $35 billion in prescription business on behalf of 20 million clients to Express Scripts.

    Centene manages care in health sectors other than Medicaid, such as Medicare and for prisons. But last year it derived almost two-thirds of its revenue — or $94 billion — from its Medicaid business, according to the company’s financial statements.  So roughly $23 billion of the new revenue Express Scripts is getting from the contract is coming from tax-funded health programs for the poor.

    As president of Express Scripts, Bricker led the effort to snatch that business away from CVS. But early this year after Express Scripts parent company Cigna didn’t make her part of its top executive team, Bricker announced that she was leaving and going to work for… CVS.

    Cigna and Express Scripts sued, citing a non-compete clause and expressing fears that Bricker might use insider knowledge to help win Centene’s business back for CVS. At least for now, a federal judge in Missouri has stopped Bricker from going to work for her erstwhile employer.

    The back-and-forth court filings shed some light on how prescription drugs and taxpayer-funded health programs for the poor are used to pad the paychecks of the very rich.

    In suing, Cigna cited the “high six-figure spot bonus” it gave Bricker after she got the Centene contract and it cited other big awards she received since 2019. The company is demanding that she repay $1.5 million in restricted stock and stock options that she received.

    For her part, Bricker didn’t betray any sense of irony in her response as she defended the huge “spot bonus” she got for winning a big book of mostly Medicaid business.

    “The Amended Complaint specifically references Express Scripts recent successful bid for the Centene contract, and that I earned a significant, one-time bonus for my integral role in achieving that business success,” she wrote in her sworn statement. “The bonus was $750,000. The context Cigna omits from its Amended Complaint is that the contract is worth billions of dollars to Cigna over its five-year term. Several members of the Express Scripts team received this one-time bonus which was appropriate given the magnitude of the contract and well earned.”

    Cigna didn’t respond when asked how many such bonuses it awarded or what Bricker’s total compensation was. Nor did it respond when asked how it justified them, given that most of the new business ultimately is from taxpayer dollars intended to provide healthcare for poor people.

    There’s a reason why Bricker might think a $750,000 spot bonus should be routine for a job well done. It pales in comparison to what the top bosses in her industry get.

    Cigna CEO David Cordani and CVS CEO Karen Lynch each were paid more than $20 million last year, while Centene CEO Sarah London was paid more than $13 million. For perspective — and assuming a 70-hour workweek — the lowest-paid of those executives gets in a day about as much as the median worker in the United States earns all year.


    Marty Schladen
    MARTY SCHLADEN

    Marty Schladen has been a reporter for decades, working in Indiana, Texas and other places before returning to his native Ohio to work at The Columbus Dispatch in 2017. He’s won state and national journalism awards for investigations into utility regulation, public corruption, the environment, prescription drug spending and other matters.

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  • Pharmacies file antitrust suit against massive drug middleman

    Pharmacies file antitrust suit against massive drug middleman

    A CVS store. Photo by Lynne Terry, Oregon Capital Chronicle, States Newsroom.

    BY:  Ohio Capital Journal

    A class-action suit has been filed in federal court on behalf of community pharmacies claiming that health giant CVS has used its dominance as a drug middleman to force pharmacies to pay large, after-the-fact fees in Medicare transactions.

    The suit was filed last week in Seattle on behalf of Osterhaus Pharmacy, which until last year did business in Maquoketa, a small town in eastern Iowa. The lawyers representing the pharmacy say they also represent other, “similarly situated” pharmacies.

    It’s the latest antitrust action against CVS and two other dominant middlemen — Express Scripts and OptumRx — which are known as pharmacy benefit managers. The Federal Trade Commission last year opened an investigation into all three companies, and Ohio Attorney General Dave Yost in March sued Express Scripts, alleging violations of the state’s antitrust law.

    Pharmacy benefit managers, or PBMs, occupy a pivotal position in the drug-supply chain.

    Each of the big three is part of a corporation that also owns a major health insurer. CVS owns Aetna, UnitedHealth owns OptumRx and Express Scripts and Cigna are part of the same corporation.

    The PBMs represent those and other insurers when it comes to filling prescriptions for people covered by the insurers. Among their functions, they create lists of drugs that are covered by the plans, create networks of pharmacies and they determine how much to reimburse those businesses for the medicines they dispense.

    The suit filed in Seattle argues that under the Medicare Part D program — which covers prescriptions for the elderly — CVS is forcing pharmacies to join its networks and agree to a system of arbitrary clawbacks long after CVS Caremark initially reconciles claims.

    The company is able to do so because it and the other two large PBMs are estimated to control 80% of that marketplace, the suit says. In other words, pharmacies have to sign contracts on CVS’s terms or give up the business of millions of insured patients.

    And in addition to its heft as a PBM, CVS is “vertically integrated.” It owns the largest retail pharmacy chain, a large mail-order pharmacy operation and a top-10 insurer. The lawsuit filed last week said CVS is able to control too many sides of prescription transactions.

    “This vertical consolidation has served CVS Caremark well,” it said. “It now controls not just the pricing of drugs, not just the selection of the drugs covered by Part D Plans, and not just the selection of pharmacies in each Part D network; CVS Caremark also controls access to at least a third of the Medicare beneficiaries enrolled in PBM-affiliated Plans. Pharmacies must accept the increasingly anti-competitive pricing and contract terms set forth by CVS Caremark or face exclusion from its Part D network.”

    For its part, CVS said the claims are false.

    “We believe the allegations are without merit and intend to defend ourselves vigorously,” spokesman Phillip Blando said in an email Monday.

    The suit alleges that some CVS fees in the Medicare Part D program violate the Sherman Antitrust Act of 1890 — which is aimed at keeping companies from using market dominance to suppress competition.

    That body of law has strong ties to Ohio. The Sherman Act was sponsored by an Ohio senator, John Sherman, and signed by an Ohio (and Indiana) president, Benjamin Harrison.

    The Buckeye State also has long had its own antitrust law, which the suit filed in Seattle last week referenced as it quoted from Yost’s suit against Express Scripts.

    “PBMs are modern gangsters… ” the Ohio suit says. “They were designed to protect and negotiate on behalf of employers and consumers after Big Pharma was criticized for overpricing medications, but instead they have absolutely destroyed transparency, scheming in the shadows to control drug prices on all sides of the market.”

    The latest suit specifically targets direct-and-indirect remuneration, or DIR, fees charged by CVS in its Part D program.

    Those are performance-based fees pharmacies have to pay if they want to be in the CVS network. The suit says CVS’s use of them has grown dramatically and increasingly rapidly over the past 13 years.

    “From 2010 to 2020, pharmacy DIR fees increased by more than 100,000%—that is, they grew more than 1,000 times larger,” the suit said. “In 2021, DIR fees increased an additional 33% from 2020 levels to $12.6 billion.”

    The suit says that all network pharmacies must pay minimum DIR fees, but they can be forced to pay much more because of factors pharmacies can’t control.

    “For example, CVS Caremark penalizes an Independent Pharmacy on adherence if a patient discontinues fulfilling her prescriptions at the pharmacy, regardless of circumstances,” the suit says. “The cause may be that the patient spends winters in a different part of the country and fills her prescriptions there, or the patient was told by the physician to discontinue using a drug, or the patient died, or the manufacturer has discontinued manufacturing the drug. CVS Caremark could assess performance so that Independent Pharmacies are not penalized for these events, none of which is within pharmacy control or actually measures pharmacy performance, but it has chosen not to do so.”


    Marty Schladen
    MARTY SCHLADEN

    Marty Schladen has been a reporter for decades, working in Indiana, Texas and other places before returning to his native Ohio to work at The Columbus Dispatch in 2017. He’s won state and national journalism awards for investigations into utility regulation, public corruption, the environment, prescription drug spending and other matters.

    MORE FROM AUTHOR

  • “Corners are cut to dispense prescriptions,” CVS employee tells Ohio Board of Pharmacy

    “Corners are cut to dispense prescriptions,” CVS employee tells Ohio Board of Pharmacy

    A CVS store. Photo by Lynne Terry, Oregon Capital Chronicle, States Newsroom.

    After years of buying and closing competitors, CVS understaffing leads to chaos and delays, Ohio regulator says

    BY: Ohio Capital Journal

    At least eight CVS pharmacies in Ohio are so understaffed that they have seen rampant turnover, dirty conditions, lack of controls over dangerous drugs and wait times as long as a month for prescriptions, according to reports by the Ohio Board of Pharmacy.

    The waits have been so long that a harried CVS pharmacist in Wooster said he was “actively triaging prescriptions to ensure lifesaving, life-sustaining medications are filled in a timely manner.”

    In one case, pharmacy workers told inspectors they begged their superiors — unsuccessfully — to close their pharmacies so they could catch up. In another, a pharmacy did intermittently close, making it impossible for patients to get their medicines during the closures.

    In another instance, Board of Pharmacy inspectors couldn’t tell if employees were stealing controlled substances. In yet another, they couldn’t tell if CVS was improperly billing insurers for scripts it didn’t fill.

    And in several additional cases, inspectors repeatedly found expired and adulterated drugs on pharmacy shelves and filled prescriptions that gave patients the wrong instructions.

    “Corners are cut to dispense prescriptions,” at least one employee at Toledo’s CVS store No. 10246 told investigators last year. Workers there added, “Supervisors/District Managers do not respond to staff calls for help,” the report said.

    The accounts come from inspection reports going back to 2020 that the Capital Journal obtained under the Ohio Public Records Act. At least some of the inspections came in response to patient complaints to the board, which licenses Ohio pharmacies.

    The inspections come after CVS — already the nation’s largest pharmacy retailer — has for years bought up competitors, closed them and moved the prescriptions of the closed pharmacies to existing CVS stores. Critics raised concerns about the practice, known as “buy and close,” at least as early as 2019.

    “Staff at this location was not increased,” a pharmacist at Dayton’s CVS store No. 2528 said last September after the store had absorbed two other closed pharmacies’ prescriptions. She quit the following month.

    For its part, CVS didn’t answer questions about specific allegations in the reports, which it referred to as “isolated incidents.”

    “We’re working with the Board of Pharmacy to resolve allegations of isolated incidents, most of which date back a year or more,” Amy Thibault, director of communications for CVS Pharmacy said in an email Wednesday. “The health and well-being of our patients is our number one priority.”

    Rampant turnover

    Pharmacies across the country found themselves under siege as the coronavirus pandemic took hold in the spring of 2020. They were conducting tests and, when they became available, providing COVID vaccines in addition to already administering those for flu and shingles.

    At the same time, some pharmacy employees were reluctant to work face-to-face with the public in a health care setting — especially before there were vaccines against a disease that has killed more than 1 million Americans.

    But according to the Board of Pharmacy reports, turnover in the CVS stores they investigated seemed particularly bad. And it seemed to be linked to stress from overwork — as well as the parent corporation’s inability or unwillingness to do anything about it.

    For example, when an inspector arrived at CVS store No. 2063 in Canton on Sept. 13, 2020, the staff was so harried that it took them 20 minutes to even acknowledge the inspector. The staff said that the store had lost a pharmacist and six technicians “within a short time.”

    As workers scrambled, they sweltered in a pharmacy in which the air conditioning unit was broken and an alarm in a drug cooler failed to warn them that it was too warm at 46.4 degrees Fahrenheit.

    “Pharmacy staff and an assistant store manager stated they have asked district leaders to close the store down temporarily to get caught up filling prescriptions as well as clean and organize the pharmacy, but this request was denied,” the report said.

    When an inspector returned to the pharmacy on Oct. 29, 2021, things had only gotten worse.

    “All pharmacy staff that was present for the September 2021 inspection quit or transferred out of CVS #2063,” the report said.

    Even more alarmingly, understaffing there created delays that easily could have harmed patients’ health — despite workers’ best efforts to “triage” which prescriptions to fill first.

    “The pharmacy was over a month behind in filling prescriptions,” the report said.

    Especially bad at CVS

    During the pandemic, conditions were universally difficult for pharmacies, but CVS might have been a special case.

    An owner of an independent pharmacy in Northern Ohio said things were rough for everybody, and that he’s still having trouble keeping enough pharmacy technicians on his staff. But, he said, that never led him to consider temporary closures, or anything like the delays filling prescriptions and other problems seen at some CVS stores.

    The pharmacist depends on CVS Caremark — the corporation’s gargantuan pharmacy benefit manager — for his business and asked not to be named. But, he said, he’s talked to CVS pharmacists who have been under pressure so great that it affected their mental health.

    The stress appeared to extend even to the upper ranks of CVS’s pharmacy operation.

    In July 2021, Ken Sidwell became leader of the district which includes Canton CVS store #2063. When he was interviewed by the Board of Pharmacy, he said the store was short-staffed when he got the job.

    Just three months later, Sidwell was gone. On Oct. 29, 2021, the new district leader, Kenneth Cook, told the Board of Pharmacy that the store “is in the process of hiring new pharmacy staff as well as transferring staff from an overstaffed CVS location.”

    CVS spokeswoman Thibault said the company’s policies ensure that its stores are not dangerously short of pharmacy workers.

    “Decisions about staffing, labor hours, workflow process, technology enhancements and other operational factors are made to ensure we have appropriate levels of staffing and resources in place at our pharmacies,” she said. “We have comprehensive policies and procedures in place to support prescription safety and we continue to make important strides, including using technology to support our pharmacy teams.”

    Buy and close

    Not only is CVS the nation’s largest pharmacy retailer, its parent corporation also owns Aetna, a top-10 insurer. It’s also buying up medical centers and physicians practices, helping to make it the nation’s sixth-largest corporation.

    And crucially for pharmacies everywhere, CVS owns the nation’s largest pharmacy benefit manager, CVS Caremark. It and Express Scripts and OptumRx are estimated to control more than 80% of the marketplace and they’re under investigation for possible anti-competitive practices by the Federal Trade Commission.

    Pharmacy benefit managers, or PBMs, act as middlemen for insurers in the drug supply chain. They decide which drugs are covered, so they have great power to negotiate huge, non-transparent rebates and other discounts from drugmakers.

    At the same time, they create pharmacy networks. And, because they control access to so many millions of patients, most small-chain and independent pharmacists think they have little choice about contracting with them on whatever terms the big PBMs choose.

    “Take-it-or-leave-it” contracts, the pharmacists call them.

    CVS has long said that it maintains strict firewalls between its retail and PBM operations, but small pharmacy operations in Ohio and elsewhere aren’t so sure.

    After seeing their reimbursements from CVS Caremark plummet in late 2016, CVS’s “Acquisition Unit” in 2017 sent many of its competitor pharmacies letters saying that it knew times were hard for them and offering to buy them out.

    In many instances, CVS didn’t put its sign on the store it had just purchased. CVS instead closed the stores and folded all of their prescriptions into an existing CVS pharmacy.

    Some pharmacists call the practice “buy and close.”

    In 2019, when CVS bought 20 stores owned by Medina-based Ritzman Pharmacy and closed all but three, critics said it was classic buy-and-close.

    Two of the now-closed pharmacies were in Wooster, one of the cities in which inspectors now find problems in a still-open CVS pharmacy. Three more — in Sugarcreek, Millersburg and Dover — were to the rural south of Canton and Massillon, where CVS stores found themselves seriously stretched in the years since.

    Mount Vernon-based Conway’s Pharmacy in 2019 partnered with Knox County to open a pharmacy in Danville on the edge of Amish Country after CVS bought and closed the only pharmacy there a few years earlier. The closure meant that Danville residents — many poor, disabled or both — had to drive 20 minutes or more to get their medicines or to consult with a pharmacist.

    Such practices have fueled fears that pharmacy deserts are being created in Ohio and elsewhere.

    Lack of accountability

    The constant churn in CVS staffing found by Board of Pharmacy investigators led to breakdowns in accounting for dangerous drugs, including opioids, the inspection reports said.

    For example, between June 10 and Sept. 22, 2022 Dayton’s CVS store No. 2528 reported 75 oxycodone, 100 hydromorphone and 70 amphetamine pills were missing. In each instance, “CVS Pharmacy was unable to determine a reason for the loss,” the inspection report said.

    For most of that period, no “Responsible Person” was in charge.

    The role is as the name implies. The Ohio Administrative Code says, “The Responsible Person shall be responsible for the practice of the profession of pharmacy, including, but not limited to, the supervision and control of dangerous drugs as required…”

    That person would normally be the managing pharmacist at a drugstore. But for months after May 26, 2022, there was no such person at the Dayton CVS, according to the report. Inspectors interviewed pharmacist Jean Getter, who said she was asked to serve as temporary manager after the previous Responsible Person, pharmacist Tyler Philo, left.

    Getter said that even though she wasn’t the Responsible Person, she asked for help sorting out the safe that contained controlled substances because “it was a mess.”

    “She asked the previous Responsible Person and also the District Leader about cleaning up the safe, but it never happened,” the report said.

    An inventory of dangerous drugs is supposed to be conducted whenever there is a change of Responsible Person at a pharmacy, but that kept not happening at the Dayton CVS, Getter said.

    “No one ever became the permanent Responsible Person, which is why Ms. Getter left CVS in August,” the report said.

    Then Pharmacy Board investigators interviewed Philo, the previous Responsible Person and learned something even more confounding.

    “He was not aware (four months after he left that) he was still listed as the Responsible Person for CVS Pharmacy #2528,” the report said.

    Controlled substances

    Board of Pharmacy inspectors also found serious potential problems in CVS stores’ tracking controlled drugs — including the kinds of drugs that have fueled Ohio’s opioid crisis.

    Some problems were as simple as leaving deliveries of dangerous drugs at the front of the store for nine hours because pharmacy staffers were too busy to get them. But others might have been more sophisticated.

    At Toledo CVS store No. 10246, inspectors conducted, Multiple audits consisting of 241 controlled substances were conducted by representatives from the Board between on or about November 11, 2021 and on or about April 27, 2022.”

    In 42% of cases, they found that too much or too little of the drugs had been provided. They discovered “significant losses” of amphetamines and the painkiller tramadol.

    “Additional losses and overages were discovered, some of which were reported to the board, but many were not reported at all, or not reported in a timely fashion,” report said. It added that auditing what happened to controlled substances was difficult “because CVS records showed multiple significant inventory adjustments and changes in medication counts…”

    Counterintuitively, investigators found that on some days when controlled substances were delivered to the Toledo pharmacy, inventories of the drugs actually went down. That might indicate “diversion” — a term used in the industry for stealing drugs.

    “It remains questionable if counts were entered as negative numbers in error, or if staff were entering negative numbers to mask the diversion of drugs received on that day,” the report said.

    In the same store, inspectors discovered chaotic conditions.

    On repeated visits, inspectors found “expired/adulterated” medications on pharmacy shelves and workers told them they hadn’t had time to address the issue. The inspectors also painted a picture of general chaos.

    “Shelving for drug storage had collapsed and medications were crushed beneath the shelving units. Drug stock crowded the aisle floors,” the report said, adding, “The counter used for non-sterile compounding was overflowing with (over-the-counter) medications and return-to-stock bottles. Staff food and beverages were also stored in this area. Moldy/rotting food was found on the counter.”

    Beyond delays and lacking controls, inspectors found another problem at the store that could endanger patients’ health.

    Inspectors on March 3, 2022 reviewed 49 prescriptions filled at the store. They found that seven “had errors in the directions to patients.”

    And when inspectors talked to employees, they heard echoes of the complaints at other CVS pharmacies they’d visited.

    • “The pharmacy is always short staffed.”
    • “The workplace was described as hectic. There is no downtime to catch up on tasks.”
    • “Morale among store employees is poor.”

    Delays and questions about improper billing

    When inspectors visited CVS store No. 8248 in Massillon in late 2021, they found a pharmacy so understaffed that “the pharmacy would close intermittently,” meaning “patients were unable to pick-up/receive their prescriptions.”

    They again found confusion over who was legally responsible.

    “The Responsible Person, Abbey Yannerella, was listed as the Responsible Person at this location as well as CVS #2063; however, she was no longer working at” the Massillon store, the report said.

    They found something else that raised serious questions.

    The store in October 2021 had more than 2,000 prescriptions waiting to be filled, the oldest of which had been waiting for 13 days. A month later, the pharmacist on duty told inspectors that after scripts go unfilled for 14 days, they’re “deleted from the queue.”

    The inspectors found one such prescription that was labeled “Print Ready.”

    “The prescription’s status indicating ‘Print Ready’ means the prescription was processed through insurance,” the report said. “When a prescription is deleted from the queue, the pharmacy does not reverse the insurance claim.”

    CVS didn’t respond directly when asked how often scenarios like this occur — or whether it routinely bills insurers for prescriptions it fails to fill for two weeks and then deletes from its system.

    On Nov. 28, 2021 a new Responsible Person, pharmacist Nayan Patel, had been named. He told investigators that the deletion of prescriptions after 14 days was a requirement of the U.S. Centers for Medicare and Medicaid Services. He added that the scripts are placed back into the queue after their deletion.

    However, “When asked to explain this process further, he could not elaborate,” the report said.

    Then on Feb. 4, 2022, the Board of Pharmacy learned that Patel was Responsible Person for two CVS pharmacies without the special permission required by the board. When the board notified a CVS district leader of that fact, “The district leader notified the board Mr. Patel is no longer the Responsible Person of” Massillon CVS store No. 8248, the report said.

    Penalties

    The board has notified CVS that it can impose penalties ranging from fines to revoking their licenses as a “Terminal Distributor of Dangerous Drugs” at each of the locations in which it found violations.

    So far, CVS store #3613 in Columbus received a $1,000 fine and a written reprimand last August, Board of Pharmacy spokesman Cameron McNamee said in an email Thursday. The violations outlined in that report seem considerably less severe than those found in some other CVS pharmacies.

    Violations found at CVS’s Canton store No. 2063 — where staff turnover was particularly rampant — are slated to be considered at the board’s Nov. 7-8 meeting McNamee said.

    Hearings for the other stores are yet to be scheduled.


    Marty Schladen
    MARTY SCHLADEN

    Marty Schladen has been a reporter for decades, working in Indiana, Texas and other places before returning to his native Ohio to work at The Columbus Dispatch in 2017. He’s won state and national journalism awards for investigations into utility regulation, public corruption, the environment, prescription drug spending and other matters.

    MORE FROM AUTHOR

  • Ohio’s Medicaid director owns the stock of some major contractors, but won’t say how much

    Ohio’s Medicaid director owns the stock of some major contractors, but won’t say how much

    A group representing small pharmacists says large chains, especially CVS, are moving patients’ prescriptions to their own stores without consent. CVS adamantly denies that. Photo by Marty Schladen, Ohio Capital Journal.

    It’s unclear if she disclosed potential conflict during massive procurement

    BY: MARTY SCHLADEN and Ohio Capital Journal

    Since she became director of the Ohio Department of Medicaid in January 2019, Maureen Corcoran has owned stock in some of the department’s biggest contractors. Given the size of those contracts, they could have increased the value of the stock Corcoran owned.

     Ohio Medicaid Director Maureen Corcoran. Official photo.

    But while she complied with one set of state disclosure requirements, Corcoran won’t say just how much stock she owns in such companies as CVS Health, UnitedHealth Group and Express Scripts — each of which has done billions of dollars worth of business with the Medicaid department since Corcoran started running it. 

    In addition, Corcoran won’t say if she filed legally required affidavits disclosing that she had an ownership stake in corporations the department hired earlier this year as part of its $20 billion managed-care re-procurement or the company the state hired to run its $1 billion OhioRISE program. Should they be found, violations of the law could carry criminal penalties and invalidate contracts signed without proper disclosures.

    Big money

    When Corcoran took the reins of the Medicaid department, she held a stake in some companies that were getting a lot of scrutiny over their business with the state. Two were CVS Caremark and OptumRX, pharmacy middlemen that together were handling more than $2 billion a year in prescription-drug transactions for the department.

    Ohio’s independent pharmacists and others accused the companies of several questionable practices — including charging a lot more for drugs than they were paying pharmacists. A state-commissioned analysis showed that in 2017, CVS and Optum charged almost a quarter-billion dollars more for drugs than they reimbursed the pharmacies that had bought and dispensed them.

    The findings were still big news — and the companies were suing the Medicaid department — when Corcoran took control just after Gov. Mike DeWine took office at the start of 2019. Even so, Corcoran held onto stocks in CVS Caremark owner CVS Health and in OptumRX owner UnitedHealth.

    According to disclosures filed with the Ohio Ethics Commission, Corcoran owned at least $1,000 worth of those companies’ stock. 

    Given that they were among 180 stocks and mutual funds she disclosed owning as of Jan. 31, 2019, it’s possible that Corcoran wasn’t even aware that she held stakes in companies that did such high-profile business with her agency. Whatever the case, Corcoran held onto shares in the companies through 2019 and 2020, her ethics filings show.

    Under Ohio’s aging ethics laws, agency bigwigs like Corcoran are allowed to own stock in companies with which their departments do business so long as their holdings don’t exceed 5% of the company’s outstanding stock. In the case of Medicaid’s big contractors, that would mean the director would have to be one of the wealthiest people in Ohio to violate the provision.

    CVS and UnitedHealth are the fourth and fifth-largest corporations in the country by revenue. In order to violate the ethics provision, Corcoran would have to have owned a combined $18 billion worth of the companies’ stock in 2019. 

    Potential for conflict

    That’s a clear sign that the state’s ethics laws need to be updated, said Catherine Turcer, executive director of Common Cause Ohio, a watchdog group.

    “Five percent of a company’s stock in the 70s, 80s or even the 90s wasn’t anywhere near what it is now,” Turcer said.

    In addition, knowing just how much Corcoran’s investments with Medicaid contractors were worth would go a long way toward showing how big a conflict of interest she has. If it’s just over $1,000, the conflict might seem nominal, but if it’s much more, it would be a lot more serious, Turcer said.

    “There are two things Maureen Corcoran could do,” Turcer said. “One would be to publicly identify how much over the $1,000 she owns and allow the public to weigh in. The other thing she could do so the public didn’t worry about the conflict of interest is actually divest herself of these stocks.”

    Last Friday, the Medicaid department was asked the value of Corcoran’s investments in CVS, UnitedHealth and Express Scripts, a third pharmacy middleman with which the department has done business.

    A spokeswoman for the department said it would respond to those and other questions, but as of Tuesday afternoon, it hadn’t. The spokeswoman also didn’t answer questions about when responses would be forthcoming.

    Bigger problem?

    Potentially more ominous for Corcoran and her department is another question they haven’t responded to: Whether Corcoran filed affidavits disclosing her interest in companies with whom the department recently entered into huge contracts.

    This year, the Medicaid department implemented a big redesign of its managed care program. 

    To gain more insight into drug transactions, the department will work next year with a single drug middleman contracted directly with the department — instead of being hired by managed-care providers as they have in the past.

    But while UnitedHealthcare’s OptumRx might be losing that business, the Medicaid department is hiring UnitedHealthcare Community Plan of Ohio to be one of six companies administering the state’s $20 billion-a-year managed-care program.

    The re-procurement has raised other questions. Also hired was a plan owned by managed-care giant Centene, which agreed earlier this year to pay out more than $1 billion to Ohio and 21 other states after being accused by Attorney General Dave Yost of fleecing taxpayers. Corcoran has struggled to explain why her department would keep doing business with the company.

    The state also is creating OhioRISE, an ambitious program intended to help 60,000 Ohio children with the most complex behavioral health and other needs. Aetna Better Health of Ohio was selected in April to administer the $1 billion program.

    The company is a subsidiary of insurer Aetna. CVS — in which Corcoran has been invested — bought the Aetna for $70 billion in 2019.

    It’s unclear whether Corcoran continues to own stock in UnitedHealth or CVS, or whether she disclosed any ownership when contracts were let this year. 

    But the state law governing such disclosures spells out potential criminal penalties for violations and it says any contract so made “is void and unenforceable.”