Drugmakers hit with federal investigations of PBM contracts
- The U.S. Department of Justice is investigating several major pharmaceutical companies for their contracts with pharmacy benefit managers, regulatory filings with the Securities and Exchange Commission show.
- Johnson and Johnson's Janssen unit, Merck, and Endo International have all received civil investigative demands (CIDs) from the U.S. Attorney's Office for the Southern District of New York requesting documents and contract information. A CID is an investigative tool similar to a subpoena but usually broader in scope, notes The Wall Street Journal.
- No specific benefit managers were named by the companies in their regulatory filings.
PBMs help health plans and employers manage drug prescription drug benefits for members. They can also run mail-order pharmacies. As rising prices for prescription drugs have come under greater scrutiny, PBMs have stepped up their negotiation efforts to win discounts from pharma companies.
Since PBMs have the power to determine which drugs are covered, drugmakers will often offer reduced prices or other rebates in order to get their drugs listed on the PBMs' formularies. Express Scripts, for example, has been aggressive in using its leverage to help rein in costs.
But the relationship between pharma companies and PBMs has begun to attract more regulatory attention, evidenced by these recent DOJ requests.
Johnson and Johnson said Tuesday that its Janssen unit had received a request in March for information on its contracts with PBMs from 2006 to present. The probe was tied to a False Claims Act investigation, the company said in its filing.
Merck was hit with a similar request, which focused specifically on contracts with PBMs related to its drugs Maxalt and Levitra.
Endo, meanwhile, disclosed the DOJ's investigative demand last week, indicating the probe was tied to its migraine drug Frova.
The trio of demands suggest the federal government will be taking a closer look at the often complicated and opaque pricing and distribution networks which sit between patients, insurers, and drugmakers.
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