Frier Levitt recently obtained a $6.25 Million settlement against a Pharmacy Benefits Manager(“PBM”) on behalf of its Plan Sponsor client (“Plan”). The Plan contracted with the PBM to administer its prescription drug program, and to negotiate, collect, and return manufacturer and pharmacy rebates. Without any contractual or legal authority to do so, and without notifying the Plan of its decision, the PBM improperly assigned its duties to rebate aggregators who, in turn, were paid substantial sums of money by the PBM out of the rebates that should have been passed on to the Plan under the parties’ contract. Despite multiple requests, the PBM refused to provide the Plan with accurate reporting documents and affirmatively concealed the fact that it had engaged and paid substantial sums to rebate aggregators to perform the PBM’s duties. When the Plan reached out to Frier Levitt, we immediately investigated the PBM’s unauthorized arrangements with rebate aggregators. Upon completion of our investigation, Frier Levitt discovered that the PBM had engaged rebate aggregators unbeknownst to the Plan and was not accurately reporting and returning rebates to the Plan in stark contrast to its contractual obligations. Armed with such knowledge, Frier Levitt filed for arbitration against the PBM. Shortly after commencing arbitration, and before the discovery process even began, we were able to leverage what we had learned during our investigation and obtained a $6.25 Million settlement on behalf of the Plan against the PBM.
In addition, since the Plan was a Medicare Part D Plan Sponsor, the PBM’s repeated failure to provide accurate reporting of rebates over the years during the parties’ contractual relationship exposed the Plan to potential additional liability to CMS. Frier Levitt provided regulatory guidance to assist the Plan in navigating applicable HHS/CMS rules and regulations to ensure compliance with the Plan’s reporting obligations including, but not limited to, Direct-and-Indirect Remuneration reporting requirements.
How Frier Levitt Can Help
Frier Levitt’s Plan Sponsor Practice Group works with Plan Sponsors to ensure PBM compliance with contracts and law, providing a variety of legal services, including, but not limited to: (i) Representation of Plan Sponsors in contractual negotiations with PBMs; (ii) Auditing of PBM performance and compliance with contractual and fiduciary obligations; (iii) Ensuring that Plan Sponsors understand their contractual rights and relationships with PBMs, including pass-through pricing and manufacturer rebates; (iv) Ensuring that Plan Sponsors understand their legal rights when PBMs have engaged in behavior that breaches a PBM’s contractual obligations and/or fiduciary duties, including situations where more aggressive legal action may be appropriate; (v) Pursuing legal action against PBMs to enforce Plan Sponsor Agreement terms and conditions; (vi) Drafting and negotiating agreements with PBMs; and (vii) Assisting Plan Sponsors with CMS Reporting and CMS Audits. If you are a Plan Sponsor dealing with PBM contracting or related issues, contact us
to speak with one of our attorneys to find out how we can help.