W.V. Court Dismisses Claims Against Medco Health Solutions

December 9, 2003

A West Virginia state Circuit Court judge has thrown out several claims lodged by the state against Medco Health Solutions, the company announced.

Judge Irene Berger granted Medco Health’s motion to dismiss the
Consumer Protection Act, fraud, conspiracy and tortuous interference claims filed by West Virginia Attorney General Darrell McGraw on behalf of the Public Employees Insurance Agency (PEIA) and the State of West Virginia. The Court will permit PEIA to re-allege the fraud claims provided it does so with the necessary specificity.

“This ruling confirms our belief that Medco Health has lived up to every aspect of its agreement with the agency, delivering quality care and net plan savings for the people of West Virginia,” said David Machlowitz, general counsel and secretary of Medco Health.

“We would note that West Virginia sued its previous pharmacy benefit
manager, and has had three providers in three years, so it seems that this is becoming an almost predictable pattern of behavior.”

Given that the allegations are similar to those faced by Medco Health and other PBMs, the ruling in West Virginia should help in defending against allegations made elsewhere, according to Machlowitz. The claims that the judge let stand include breach of contract, accounting and unjust enrichment. Medco Health vehemently denies those claims and will defend against them.

“All along it has been our belief that this case was nothing more – and
nothing less – than a straightforward contractual dispute, and we believe the facts are on our side. We applaud the court’s well-reasoned approach and we look forward to presenting our case,” said Machlowitz.

Medco Health filed on Oct. 25, 2002 its action against PEIA, which was a Medco Health client for two years. The complaint asserts that PEIA owes Medco Health approximately $2 million as a result of cost-sharing provisions in the contract related to savings guarantees.

Since the lawsuit was filed, the Federal Government in a report issued by the U.S. General Accounting Office in January 2003, validated the numerous ways PBMs, such as Medco Health, achieve cost savings for health plans and the members they serve.

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