Contact Us

If you would like more information regarding this case, please contact us via  or call us toll free at 800.776.6044.

 

Drug Misclassification: Are you a plan participant or fiduciary who is paying brand name drug prices for generic drugs?

 

PBM, brand name drugs, generic drugs, Keller Rohrback, investigation, lawsuit, complex litigation, class actionEver wonder if you are paying too much for generic drugs? Very few people people know that Pharmacy Benefit Managers (“PBMs”)- insurance industry middlemen – often misclassify generic drugs as name brand drugs.

PBMs may do this in order to meet the quota of reported “discounts” they’ve agreed to offer certain health plans. But they don’t  go on to provide any meaningful savings to the plan or its participants. PBMs have begun to include terms in their contracts with insurers or plans that may purportedly permit them to classify “single source generics” or “branded generics” as “brand name” drugs.

How this Hurts Your Plan or its Participants/Beneficiaries:

By classifying “single source generics” or “branded generics” as “brand name” drugs, PBMs can overcharge both plans and participants. These classifications are generally made pursuant to proprietary and/or confidential methodologies. This activity gives PBMs wide discretion to classify drugs in a way that maximizes their profits and makes it look like they are meeting their annual discounting goals when reporting to the health plan. PBMs are falsely driving discount reporting figures in their favor, potentially avoiding paying plans back for failing to meet discount goals in year-end reconciliation processes.

  • Artificial Discount Guarantees & Increased Costs: Here is an example: a “discount” on a drug that is misclassified as brand may look relatively large or generous, because brand drugs usually have lower discounts than generic ones (generic discounts usually are above 25%, while brand discounts usually are less than 20%). If the drug were properly classified as generic, however, the discount may appear inadequate. The plan may be paying too much for such drugs, while the PBM manipulates categories and discounts to make it appear it is meeting plan cost goals for both brand and generic discounts.
  • Patient Overcharges: As a result of the misclassification of generic drugs as “brand” drugs, some consumers are being charged a brand-name price (often in the form of a higher tier co-pay or co-insurance fee) for a generic product—meaning higher drug prices for patients.

Dual Classification of Generics

Another variation on the misclassification of generics as brands is where the PBM changes the classification from “generic” to “brand” and back again, to suit its purposes at different times. The PBM may use its discretion to classify “single source generics” or “branded generics” as “generic” on the formulary but then change the classification to “brand” when it is time to reconcile with the plan at the end of the year. These classifications are manipulated depending on who is paying (patient or plan/employer) or who gets more financial benefit from the classification. For example, at the pharmacy counter, a drug is classified as “generic,” so the patient pays a lower generic-tier copay. However, when reporting discounts to plans, the PBM changes the classification of the same drug to “brand” so that the aggregate brand discounting totals for the plan appear to be meeting annual goals.

How this Hurts Your Plan:

  • Artificial Discount Guarantees & Increased Costs: By misclassifying generics as brands selectively, PBMs are able to artificially inflate the reporting of “discounts” they offer to plans, while participants and plans are under the impression that a drug is “generic” due to tiering and copay/coinsurance structures. The PBM can artificially drive discount reporting figures in its favor, potentially avoiding paying plans back for failing to meet discount goals in year-end reconciliation processes, while concealing the dual classification scheme.

If you believe this scheme is happening to you, we would like to hear your story. Please contact us. You are welcome to call us toll free at (800) 776-6044, email , or fill out the contact form below. Attorney advertising.

Contact Us

If you would like more information regarding this investigaton, please contact us via  or call us toll free at 800.776.6044.