Pharmacy Middleman Grants Huge Bonuses for Winning Business Meant to Help the Poor

Several employees of drug middleman Express Scripts last year raked in bonuses of $750,000 each for getting the business of a managed-care company that depends on Medicaid for the bulk of its business.

click to enlarge Ohio Attorney General Dave Yost in March sued Express Scripts and several other healthcare companies under the Valentine Act — Ohio’s antitrust law — claiming that the companies participate in  “a complex ‘pay to play’ rebate system that perversely pushes manufacturers to increase drug prices in order to be placed on, or receive, preferred placement on PBM formularies." - Photo by: Pixabay, Pexels
Photo by: Pixabay, Pexels
Ohio Attorney General Dave Yost in March sued Express Scripts and several other healthcare companies under the Valentine Act — Ohio’s antitrust law — claiming that the companies participate in  “a complex ‘pay to play’ rebate system that perversely pushes manufacturers to increase drug prices in order to be placed on, or receive, preferred placement on PBM formularies."

Medicaid might be a taxpayer-funded health program for the poor, but that doesn’t mean others aren’t getting rich off of it — including employees of a company the state is suing on antitrust grounds.

Several employees of drug middleman Express Scripts last year raked in bonuses of $750,000 each for getting the business of a managed-care company that depends on Medicaid for the bulk of its business. 

In other words, in addition to their already-high pay, they received bonuses that were 18 times the average American’s annual pay just for landing a contract.  And that contract is with a company that has already paid out $88.3 million to settle claims that it had defrauded the Ohio Medicaid program.

It might be striking to the average taxpayer that people with huge corporations are profiting so lavishly off of programs for the poor. But one of the Express Scripts employees — who also helped prepare the company for a federal antitrust investigation — said the bonuses were “well earned.”

Ohio Attorney General Dave Yost in March sued Express Scripts and several other health care companies under the Valentine Act — Ohio’s antitrust law — claiming that the companies participate in  “a complex ‘pay to play’ rebate system that, perversely, pushes manufacturers to increase drug prices in order to be placed on, or receive, preferred placement on PBM formularies.”  

As a pharmacy benefit manager, or PBM, St. Louis-based Express Scripts represents health insurers — including parent company Cigna — in drug transactions. It decides which drugs are covered and uses that leverage to extract rebates from drug manufacturers who want to get their products on its “formularies,” or lists of covered drugs.

Express Scripts also creates networks of pharmacies and it decides how much to reimburse them for the drugs they dispense. And because it keeps much of the data about rebates and reimbursements secret, it’s hard to know how much they’re passing along to insurers and pharmacies and how much they’re pocketing.

It’s sure to be a lot. Two-thirds of Cigna’s $110 billion in revenue last year came from its Express Scripts subsidiary, the PBM’s former president said in a sworn statement in June.

The executive, Amy Bricker, resigned her post earlier in January to take another with another vast health care player, CVS. 

That company owns another huge PBM, CVS Caremark, and between it, Express Scripts and OptumRx (part of UnitedHealth), they control the prescription coverage of more than 70% of the insured people in the United States. 

As part of her sworn statement, Bricker stuck to the company line.

“As a PBM, Express Scripts’ goal is to reduce the cost of prescription medication for its clients — the Payor Entities,” she said. “As president of Express Scripts, I was responsible for Express Scripts’ relationships with its (client insurance companies) as well as the tools/levers utilized to lower the cost of prescription medications.”

However, Yost and many others maintain that the big PBMs actually force drugmakers to raise list prices in order to provide ever-growing rebates to PBMs and there’s been some research to support that. And there’s the fact that an investigation found that in 2017, CVS Caremark and OptumRx billed Ohio Medicaid $223 million more for prescription drugs than they paid the pharmacies that had purchased and dispensed them.

Those claims and others last year prompted the Federal Trade Commission to open a major, ongoing investigation into the big PBMs.

Bricker said that while she was still president of Express Scripts, one of her duties was to help the company respond to the FTC investigation. But the whole reason she was making the statement centered around another major enterprise she led — acquiring the business of Centene.

That company, also based in St. Louis, is the largest Medicaid managed-care company in the United States. It acts as a health insurer on behalf of states as they administer the federal-state health program for the poor.

When it acts as an insurer, Centene hires PBMs to handle drug transactions. And in that capacity, the company has had its problems in Ohio and elsewhere. Yost sued Centene in early 2021 on claims that it used two of its own PBMs to bilk Ohio Medicaid out of tens of millions. 

Within months, the company agreed to pay Ohio $88.3 million to settle the suit — and it announced that it was setting aside more than $1 billion to settle similar claims with more than 20 other states that hadn’t even sued it. Centene later announced that it would exit the PBM business.

Centene had used CVS Caremark as its PBM until last November when it announced that it was moving $35 billion in prescription business on behalf of 20 million clients to Express Scripts.

Centene manages care in health sectors other than Medicaid, such as Medicare and for prisons. But last year it derived almost two-thirds of its revenue — or $94 billion — from its Medicaid business, according to the company’s financial statements.  So roughly $23 billion of the new revenue Express Scripts is getting from the contract is coming from tax-funded health programs for the poor.

As president of Express Scripts, Bricker led the effort to snatch that business away from CVS. But early this year, after Express Scripts parent company Cigna didn’t make her part of its top executive team, Bricker announced that she was leaving and going to work for CVS.

Cigna and Express Scripts sued, citing a non-compete clause and expressing fears that Bricker might use insider knowledge to help win Centene’s business back for CVS. At least for now, a federal judge in Missouri has stopped Bricker from going to work for her erstwhile employer.

The back-and-forth court filings shed some light on how prescription drugs and taxpayer-funded health programs for the poor are used to pad the paychecks of the very rich.

In suing, Cigna cited the “high six-figure spot bonus” it gave Bricker after she got the Centene contract and it cited other big awards she received since 2019. The company is demanding that she repay $1.5 million in restricted stock and stock options that she received.

For her part, Bricker didn’t betray any sense of irony in her response as she defended the huge “spot bonus” she got for winning a big book of mostly Medicaid business.

“The Amended Complaint specifically references Express Scripts' recent successful bid for the Centene contract, and that I earned a significant, one-time bonus for my integral role in achieving that business success,” she wrote in her sworn statement. “The bonus was $750,000. The context Cigna omits from its Amended Complaint is that the contract is worth billions of dollars to Cigna over its five-year term. Several members of the Express Scripts team received this one-time bonus, which was appropriate given the magnitude of the contract and well earned.”

Cigna didn’t respond when asked how many such bonuses it awarded or what Bricker’s total compensation was. Nor did it respond when asked how it justified them, given that most of the new business ultimately is from taxpayer dollars intended to provide health care for poor people.

There’s a reason why Bricker might think a $750,000 spot bonus should be routine for a job well done. It pales in comparison to what the top bosses in her industry get.

Cigna CEO David Cordani and CVS CEO Karen Lynch each were paid more than $20 million last year, while Centene CEO Sarah London was paid more than $13 million. For perspective — and assuming a 70-hour workweek — the lowest-paid of those executives gets in a day about as much as the median worker in the United States earns all year.

This story was originally published by the Ohio Capital Journal and republished here with permission.


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