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Medco under the federal microscope for potential anti-kickback violations

Compliance Monitor, December 8, 2004

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Federal prosecutors are examining payments that pharmacy benefit management company Medco Health Solutions Inc. made to a health insurer to see if it violated anti-kickback laws, according to court filings reported in a December 3 Associated Press (AP) story.

The examination is a response to a 1998 deal in which Medco agreed to pay UnitedHealth Group Inc. for medical data the insurer had collected. At the time, Medco was trying to win a contract to manage the medication needs of UnitedHealth's clients, AP reported.

In a court filing in late November, federal prosecutors in Philadelphia said they had already deposed one UnitedHealth executive about the deal, and asked a judge for more time to depose a second, saying he was "the most knowledgeable individual of Medco's offer of a kickback in excess of $200 million."

A Medco spokeswoman would not speak about the arrangement in detail, but denied that it was improper, AP reported.

UnitedHealth Group spokesman Mark Lindsay told AP the company's contract with Medco was the result of "good-faith, arms-length, and often hard-fought negotiations."

In a civil lawsuit, the U.S. Attorney accused Medco of destroying mail-order prescriptions to avoid paying late penalties when it couldn't fill them in time and improperly inducing physicians to switch the drugs their patients were taking.

The suit also accused Medco of giving an illegal $87.4 million kickback to insurer Oxford Health Plans Inc., which agreed to merge with UnitedHealth in April.

Medco denied all charges, AP reported.

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