Indiana has reached a $66.5 million settlement with St. Louis-based health insurer Centene Corp. to resolve allegations that the company overcharged the state’s Medicaid program for pharmaceutical costs.
Indiana Attorney General Todd Rokita announced the settlement Tuesday, making it the latest large financial penalty for Centene for its pharmacy benefits practices. The company did not admit wrongdoing or issue its own announcement. The settlement agreement was signed on Thursday.
“Companies must be held accountable for their actions,” Rokita said in written remarks.
Indiana alleged that Centene failed to disclose its true pharmacy benefits and services costs while acting as a pharmacy benefits manager for Indiana’s Medicaid program.
Pharmacy benefits managers, or PBMs, contract with pharmacies and reimburse them for filling prescriptions on behalf of insurance plans. As a result of Centene’s failure to disclose true costs, Indiana had accused of inflating dispensing fees, causing an added cost to the Medicaid program.
Indiana is one of at least 18 states to investigate Centene’s alleged overcharges. The agreement requires Centene to pay Indiana the total amount of the settlement in two installments over 12 months.
In recent months, Centene reached similar settlements with New Mexico ($13.7 million), Kansas ($27.6 million), Ohio ($88 million), Mississippi ($55 million) and other states. Last year, the company told investors it had set aside more than $1.2 billion to resolve similar lawsuits in other states.
It’s the latest setback for pharmacy benefits managers, which have long operated below the radar, with little government regulation, making it difficult for consumers, employers and insurance managers to see if they’re getting a good deal.
PBMs are notoriously protective of their contracts, making it difficult for consumers, employers and insurance managers to review their practices. Often, PBMs refuse to discuss the deals they set up with health plans, drugmakers and pharmacies.
The Indiana Hospital Association has said it supports any effort to increase transparency into how PBMs work—especially how they negotiate rebates with drugmakers, and who winds up pocketing the rebates.