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JACKSON • Mississippi’s Division of Medicaid is not the only state agency where authorities suspect drug middlemen may have overcharged taxpayers to pad their profits in recent years.

These middlemen, known as pharmacy benefit managers, are also suspected by officials of wrongdoing at the Mississippi State and School Employees’ Life and Health Insurance Plan, which covers nearly 200,000 state employees, retirees and their families.

The plan is overseen by the Department of Finance and Administration, but benefits are administered by Blue Cross & Blue Shield of Mississippi, which works with another company to deliver drugs to enrollees.

Documents from 2019 show both State Auditor Shad White and former Attorney General Jim Hood launched an investigation into Blue Cross & Blue Shield of Mississippi and its then-pharmacy benefit manager, Prime Therapeutics, regarding “wrongful retention of rebates and recoupments.”

After taking office last year, Attorney General Lynn Fitch terminated a contract with the outside law firm working on the investigation, though a Fitch spokeswoman said this week the case remains open.

The Daily Journal previously reported on a separate probe involving pharmacy benefit managers at the state’s Division of Medicaid. That investigation is targeting the state’s largest Medicaid managed care contractor, Fortune 50 company Centene, and possibly others. Mississippi joins a growing list of states scrutinizing the opaque world of PBMs, including Ohio, Oklahoma, Georgia, New Mexico, Kansas and Arkansas, as well as Washington, D.C., according to The Wall Street Journal.

Pharmacy benefit managers are subcontractors often hired by health plans or employers to manage drug benefits, negotiate drug pricing with manufacturers, and reimburse pharmacists. Part of PBMs’ job involves negotiating rebates and other discounts from drugmakers, and in exchange they provide preferred placement to a drugmakers’ product.

Former Mississippi Governor Ronnie Musgrove confirmed his law firm was hired by the AG’s office to scrutinize these drug rebates at the state employee health plan — including whether Blue Cross & Blue Shield of Mississippi and Prime Therapeutics were passing on the savings they received to the state.

The former Democratic governor’s firm was tasked with investigating and potentially pursuing legal action against BCBS and Prime, according to a contract with Hood’s office. But before Musgrove’s firm could get very far, he said Fitch terminated the contract. A February 2020 termination letter obtained by the Daily Journal does not give a reason.

Fitch spokeswoman Colby Jordan said various investigations begun under Hood “helped to inform the litigation we are currently pursuing,” and that she could not comment on the state health plan probe because it remains an open case and the AG’s office wants to “preserve our litigation strategy.”

Fitch is a Republican and Hood is a Democrat.

In a statement to the Daily Journal, Blue Cross & Blue Shield of Mississippi underscored that it does not serve as the PBM for the state employee health plan.

The company said it does handle some prescription drug claims itself, and “to the extent those medical prescription drugs are subject to medical drug rebates, 100% of the available rebates are provided to the (state).” The company said it was informed in late 2019 that the state auditor wanted to conduct an audit on both BCBS and Prime Therapeutics, but the audit never occurred.

Prime Therapeutics downplayed the significance of the probe, and did not directly answer several questions from the Daily Journal — including whether it had passed on all rebates and other savings to the state.

“As a pharmacy benefit manager Prime Therapeutics holds many contracts with hundreds of clients,” the company said in a statement. “Audits of this nature are routine activities and as a policy we do not comment on client audit matters.”

Prime Therapeutics is owned by 19 Blue Cross & Blue Shield plans around the country, according to its website. It held a $34 million contract with the state that began in 2016. But Mississippi’s employee health plan switched to a new PBM, CVS Caremark, as of this year. A spokeswoman for the Department of Finance and Administration, which oversees the health plan, said the switch to CVS was the result of a routine bidding process, with CVS providing the winning proposal after Prime’s contract ended.

CVS Caremark is also facing investigations for its PBM practices by attorneys general in several other states. CVS disclosed the investigations in a recent U.S. Securities and Exchange Commission filing, noting the state AGs were scrutinizing the corporation’s PBM “pricing and rebates.”

Ohio appears to be the furthest along of any state in going after PBMs for allegedly overcharging taxpayers, including PBMs that were working on behalf of that state’s worker’s compensation agency, its highway patrol retirement system and its Medicaid agency.

Ohio Attorney General Dave Yost recently sued Centene for allegedly bilking Ohio taxpayers out of millions of dollars via the state’s Medicaid managed care contract with the company.

Mississippi authorities have said their investigation into Centene is similar to Ohio’s. The St. Louis-based company has strongly denied the allegations.

Mississippi’s Medicaid contract with Centene is set to end at the end of this month, which could have provided an offramp for the state’s relationship with the mega corporation as the investigation into its PBM practices continues.

But Division of Medicaid spokesman Matt Westerfield said this week his agency will exercise an optional extension — allowing Centene’s subsidiary Magnolia Health to stay on the job for another year. The state’s two other Medicaid managed care firms, UnitedHealthcare and Molina Healthcare, were also granted the yearlong extension.

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