[V]ermont will receive more than $500,000 in drug rebates to settle a dispute with a company that manages prescription benefits for state employees and retirees.
The settlement resolves disputed charges paid by the state under a pharmacy benefit management contract with St. Louis-based Express Scripts.
That contract dated to 2013, and there was disagreement about drug discounts that state officials believed they were entitled to, said Bill Griffin, chief assistant attorney general.
“It was a complex contract subject to interpretation,” Griffin said. “The state and the company had very different interpretations.”
An Express Scripts spokesperson agreed with that characterization but also said the company had “acted in accordance with the (Vermont) contract at all times.”
“To avoid the cost of unnecessary litigation, both parties agreed to this settlement,” the company said in a statement issued Wednesday.
Pharmacy benefit managers are key links in the prescription drug chain. Often characterized as “middlemen,” they perform functions like negotiating discounts with drug manufacturers and processing drug claims.
Express Scripts is a major player in that industry, with 3,000 clients and more than $100 billion in revenue in 2017. The company says it handles 1.4 billion prescriptions annually.
The company’s discount dispute with Vermont didn’t involve just one type of drug, Griffin said. Rather, he said, “there was more than one formula, and it varied with categories of drugs.”
The disagreement took time to resolve due to protracted talks. “Neither (side) knew how a judge would interpret it, so we had a lot of negotiations over time and traded information,” Griffin said.
The end result is that Vermont will receive $503,500 in “increased guaranteed prescription rebates” next year for drugs the state purchased in 2018.
“I am pleased that we were able to deliver real value to the state while resolving our disagreement,” Attorney General TJ Donovan said in a prepared statement issued with the settlement announcement. “Health care is more expensive every year, and Vermont taxpayers and state employees need to know that state government is looking out for them.”
Griffin said the attorney general’s office worked closely with the state Human Resources Department, which administers the benefit program. Resolving the matter through rebates makes sense, he said, in part because “we have an ongoing contract between these parties.”
Subsequent contracts between Express Scripts and the state have clarified language in order to avoid discount disputes, officials said.
The Express Scripts spokesperson said the company is “pleased to continue serving the state of Vermont to deliver better health care outcomes at lower costs.”
