[co-authors: Derek Flynn and Shaina Sikka]
2022 continues to see a surge in state-led PBM enforcement efforts. This roundup provides a brief summary of Louisiana’s complaint against United Healthcare and OptumRx related to its Medicaid program and recent state legislative actions.
Louisiana’s Complaint Against United Healthcare and OptumRx
In April 2022, the Louisiana Attorney General (AG) filed suit against United Healthcare of Louisiana (UHC) and Optum Rx, Inc. (Optum), alleging that UHC and Optum engaged in business practices that increased drug prices and Louisiana’s Medicaid program costs over time.
The AG outlined a series of background facts indicating that a general lack of transparency from UHC was the driving force behind Louisiana’s complaint. The AG alleged that UHC and Optum used deceptive practices to misrepresent the cost of pharmacy services, causing Louisiana to make inflated payments to UHC. The AG claimed that both parties created opaque contracts to conceal payments and services. Further, the AG alleged that the parties failed to comply with state agency requests for records and state Medicaid rebate and reimbursement terms.
The AG argued that these activities violate a number of laws, including violations of contractual obligations, State Medicaid regulations, the Louisiana Unfair Trade Practices Act, and the Louisiana Medical Assistance Program Integrity Law.
UHC and Optum responded and argued that the AG has no right of action to bring its breach of contract claims, as it is not a party to either contract, and further, that there is no cause of action for any of the AG’s claims. UHC and Optum set forth that the AG’s complaint is premature and unsupported, as it did not meaningfully engage with UHC or Optum during its request for information. We will continue to monitor this case and provide updates.
State Legislative Update
States continue to enact legislation aimed at (1) increasing pharmacy price transparency, (2) regulating pharmacy reimbursement amounts, and (3) setting parameters for contracts between PBMs and plans or pharmacies. Since our last update, more than 14 states have introduced or enacted legislation in this area. Here is a sampling of newly enacted state legislation:
We expect states to continue engaging in efforts to increase oversight of PBMs. We will continue to monitor and report on relevant legislative activity.