Pennsylvania auditor claims Express Scripts, Highmark Insurance overcharged county $1.6 million for prescription drugs

A county official in southwestern Pennsylvania is alleging an insurer and pharmacy benefits manager overcharged Lehigh Valley $1.6 million for prescription drugs over a three-year period, an experience that Controller Mark Pinsley said is far too common opaque industry.

“This is, as they would say, a standard practice,” Pinsley said. “This is why standard practices need to be changed.”

On Jan. 12, Pinsley released a report that analyzed the prices of 200 prescription drug claims that Lehigh Valley paid for its employees, their families and retirees. The county is self-insured and counts on Highmark Insurance to adminster its claims and Express Scripts to act as its pharmacy benefit manager. Pinsley compared the drug prices for 200 claims to costs listed on the consumer drug discount site GoodRX.com and found that cheaper prices were available for every drug he reviewed. If the cheapest price been used, the report found the county could have saved more than $650,000 in prescription drug claims and $80,000 in medical claim prescription rebates in 2019.

He also alleges that Highmark’s national pharmacy service misleadingly markets the cost of its individual drugs, by comparing the price for a 30-day supply at an independent pharmacy to a 90-day supply at Express Scripts. Of the nearly 235,000 claims submitted to Highmark in 2019, Pinsley said he was only allowed access to 200 invoices.

“We buy $7 million worth of drugs every year. Why should someone who has no insurance be able to buy it at a better price?” Pinsley asked. “The whole goal of engaging with Highmark’s flashy PBM Express Scripts is that they’re getting us the best price because we’re spending more money than the average person who has no insurance.”

Additionally, he said Highmark pushed the county to accept a fixed discount rebate for its enrollees, rather than receiving a discount for every beneficiary Lehigh covers. If the county had opted to receive individual rebates, Pinsley said Lehigh could have saved $1.6 million between 2017 and 2019. Pinsley also wished the relationship between Highmark and the McGriff Insurance broker were more transparent. Although he does not believe that McGriff did anything wrong, he believes the fact that McGriff is paid by Highmark should have been disclosed since it could create a conflict of interest.

In February, the county will introduce a plan to start paying McGriff for its services. Come 2021, insurance brokers and consultants will need to disclose to all employers and individuals the various forms of compensation they receive from vendors associated with a health plan, under the newly-passed requirement in the December consolidated appropriations bill.

In a statement, McGriff said it disagrees with many parts of Pinsley’s audit and reiterated that the broker had done nothing wrong. Highmark Health spokesperson Leilyn Perri called the audit “a misinformed and misleading assessment of pharmacy costs,” saying that Pinsley cherrypicked certain drugs to compare and that the consumer price tool does not account for all of the services that Highmark provides.

“Comparing the cost of a small number of drugs on a pricing tool to the overall value and member experience offered by health benefits does not work,” Perri wrote in an emailed statement.

Highmark’s lawyers also said the price savings Pinsley found overstated because he compared price data from 2020 rather than 2019. They added that local pharmacies do not always offer the specialty drugs needed by Lehigh’s beneficiaries, and that constantly shifting pharmacies every 30 to 90 days disrupts individuals’ quality of care.

“The part of the statement where they said you’re comparing 2020 pricing to 2019, it’s a fair statement,” Pinsley said. “However, I would say this: ‘How often are you seeing pricing going down?'”

Additionally, the lawyers allege that Pinsley violated the terms of the insurer’s contract with the county by disclosing proprietary business information. Highmark did not immediately respond to a question about whether it was considering legal action against Lehigh or Pinsley.

But Pinsley said he stands by everything he reported in the audit, which he said is aggregate price data and public information. He added that he believes more municipalities should conduct such reports since it is the only way to change a system that he called unfair.

“I feel like it’s just a false narrative,” Pinsley said. “It’s just what they have created, like you either get this or you get this. That’s their decision. There’s no rule that says it has to be that way.”