Pharmacy Benefit Manager Agrees to Pay $15.2 Million to Settle Allegations of Arkansas Medicaid Overbilling

Cozen O'Connor

Cozen O'Connor

  • Arkansas AG Leslie Rutledge reached a settlement with Pharmacy Benefit Manager (“PBM”) Envolve Pharmacy Solutions (“Envolve”), its parent company Centene Corporation, and other Centene subsidiaries (collectively “Centene”) to resolve allegations that Centene used its subsidiaries to overcharge the state for medications in its Medicaid program.
  • According to the AG’s office, Arkansas Medicaid contracted with Envolve to help manage its prescription drug program, and Envolve subcontracted its pharmacy-payment responsibilities to a third party. Envolve allegedly then overcharged Arkansas Medicaid, reporting inflated amounts of costs paid to pharmacies for the drugs by failing to disclose the substantial discounts Envolve received under the terms of its subcontract.
  • Under the terms of the settlement, Centene will pay $15.2 million to the state. Centene also agreed to revise its business practices and to provide the state with full transparency related to all pharmacy benefit claims, including the exact amounts paid for each pharmaceutical claim, among other things.
  • As previously reported, in 2020, AG Rutledge obtained a ruling from the U.S. Supreme Court in Rutledge v. Pharmaceutical Care Management Association, 18-540, upholding Arkansas’s right to regulate the prices at which PMBs reimburse pharmacies for drugs covered by prescription-drug plans. A PBM challenged the Arkansas law that regulated PBM reimbursement rates (“Act 900”), arguing that it was preempted by the Employee Retirement Income Security Act (“ERISA”), but the Court held that ERISA did not preempt Act 900 because it did not relate to or have an impermissible connection with an ERISA plan.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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