Pharmaceutical industry pays billions in fraud settlements; Walgreen selling PBM Co.

Bloomberg: "Walgreen Co., the largest U.S. drug-store chain, is looking to sell its pharmacy-benefits management business and has hired an adviser to run an auction, said three people with knowledge of the matter. The sale of the PBM unit, which Walgreen started in 1995, may fetch $500 million to $1 billion. … Medco Health Solutions Inc., Express Scripts Inc. and CVS Caremark Corp., the three largest PBMs in the U.S., are among the companies that have expressed interest, the people said. Walgreen is expanding its retail and worksite medical clinics as well as its specialty pharmacy, home health care, infusion and respiratory therapy businesses." PBMs profit "by negotiating prices with retail pharmacies and drugmakers and processing a large number of claims. They pass most of those savings on to corporate, government and insurance customers" (McCracken and Wolf, 10/25).

The Associated Press: "Pharmaceutical companies made up eight of the government's top 10 settlements related to fraud in the last year, according to the advocacy group Taxpayers Against Fraud Education Fund. An insurer and a hospital chain filled out the list. … Drug companies are permitted to market drugs only for uses that have been approved by the FDA. In recent years the Department of Justice has increasingly pursued cases of so-called off-label marketing by pharmaceutical companies." Of the $3.1 billion collected last year under the False Claims Act, approximately 80 percent "came from health care companies, including insurers and hospitals," the group said. Despite the payouts, "some lawyers and public health advocates say steeper penalties are needed to curb industry behavior" (Perrone, 10/25).