Judge in opioid proceedings slams pharmacy middlemen as they try to stall cases
10 January
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The U.S. district judge in Cleveland, Ohio handling a galaxy of claims stemming from the prescription opioid epidemic on Monday reiterated his belief that powerful drug middlemen are trying to stall cases against them.
One maneuver, he said, “borders on frivolous.” That’s not something lawyers want to hear from a judge in a case where $41 billion in settlements have already been awarded — and billions of their clients’ dollars are potentially at stake.
More than a half-million Americans have died from opioid overdoses since 1999, and the lives of countless more have been shattered.
Overprescription of opioids was a major cause of the epidemic. Wealthy interests made billions, while many ignored evidence that what they were doing was devastating Americans, their families, and their communities.
Since 2017, U.S. District Judge Dan Aaron Polster has been working to consolidate more than 2,000 claims in his Cleveland federal court. They were filed by towns, cities, counties, and Indian tribes against those behind the the flood of opioid pills: doctors who prescribed them, companies that made them, wholesalers that distributed them, pharmacies that sold them, and the pharmacy middlemen that facilitated the transactions.
So far, cases have been consolidated and settlements reached with wholesalers such as Dublin-based Cardinal Health. Manufacturers such as Teva, Allergan, and Janssen Pharmaceuticals also have settled.
In addition, pharmacy chains CVS, Walgreens, and Walmart have agreed to pay a combined $13.1 billion to settle claims that their negligent conduct fueled the scourge.
But when it comes to middlemen known as pharmacy benefit managers, lawyers are still in the process of deciding which of about 80 cases against them should be considered first. So any settlements might be far off.
The three largest middlemen — CVS Caremark, OptumRx, and Express Scripts — work on behalf of insurers to facilitate drug transactions. They negotiate rebates from drugmakers, they create pharmacy networks, and they determine reimbursements and reconcile claims.
Also known as PBMs, the big-three benefit managers control access to roughly 80% of insured Americans. They hold enormous sway over drugmakers because they decide on behalf of insurers which drugs to cover and which of those to give the most preferential treatment, often by not requiring a copayment.
To get preferential treatment — and thus sell more of their products — drugmakers pay PBMs huge rebates and fees. The system is far from transparent, but the PBMs pass a portion of that money along to their clients and keep a portion themselves.
Federal regulators have accused the big PBMs, each part of a massive health conglomerate, of using the system to push up rebates, list prices of drugs and out-of-pocket costs for patients, some of whom are among the least able to afford them.
Two recent journalistic investigations showed how opioid makers used the system of rebates and fees to get PBMs to do their bidding.
In October, Barron’s reported that between 2016 and 2017 oxycontin maker Purdue Pharma paid $400 million in rebates and fees to the big three PBMs. The story detailed a consultant’s report saying that Purdue officials knew that big rebates were key to keep the PBMs covering their products.
In 2020, Purdue pleaded guilty to several charges, including misleading the DEA as it marketed opioids to entities it had reason to believe were selling them illicitly, and to paying doctors kickbacks to write more opioid prescriptions. The company also agreed to pay $8.6 billion.
In December, the New York Times reported that the PBMs avoided or delayed putting limits on their opioid coverage in exchange for greater rebates and fees from the companies that made them. The foot dragging continued even as some executives pleaded for more responsible conduct, the story said.
As litigation against the PBMs proceeds in Cleveland, the companies are trying to avoid turning over personnel records of company officials before they sit for depositions in the case. The PBMs have asked Judge Polster to delay an order to turn over the records pending an emergency appeal to the 6th U.S. Circuit Court of Appeals in Cincinnati.
In an amended order filed on Monday, the judge wasn’t having any of it.
He noted that personnel records had been turned over in earlier parts of the multidistrict litigation, and that the PDM defendants were free to request the personnel records of anyone they planned to depose.
Polster also wrote that “this Court has long stated” that the PBMs could redact items such as addresses, phone numbers and medical history that the PBMs said they wanted to protect. Then he accused them of blatantly trying to stall.
“Ultimately, the PBMs’ request for emergency intervention by the Sixth Circuit regarding an everyday discovery matter borders on frivolous,” he wrote. “The Court believes the PBMs are wasting this Court’s and the Sixth Circuit’s time with a mandamus petition regarding the discoverability of current and former employees’ work background regarding compensation, discipline and commendations, job history, and so on.”
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