Cigna, Express Scripts Settle N.Y. ‘Drug Switching’ Case for $27 Million

Express Scripts Inc. and health insurer Cigna Corp. have settled for a combined $27 million in a lawsuit brought by New York state related to contracts they had to provide pharmacy benefit management services to the state's employee health plan.

Express Scripts, one of the biggest PBMs in the United States, said in a statement it didn't conduct brand-name drug therapeutic "interchange" programs for the Empire Plan, which provides health insurance to state and local government employees, retirees and their dependents. The PBM also said it doesn't recommend switches to a higher-cost drug and doesn't accept pharmaceutical manufacturer funding for these programs.

Cigna (NYSE: CI) said in a statement it "agreed to make a contribution, as prolonged litigation is not in anyone’s best interest."

"We believed that at all times, Cigna fulfilled its obligations to the State of New York,” Cigna said.

A spokesperson for New York state Attorney General Andrew Cuomo declined to comment.

Express Scripts (NYSE: ESRX) said it served the state through a contract with Cigna, which, in turn, contracted directly with the state under a New York law that required an insurer to be the contracting party. At the time the suit was filed, the contracts totaled no more than $1 billion a year in drug spending, the company said.

The settlement applies to the Empire Plan and any other drug benefit plan with its main place of business in New York served by either Cigna or Express Scripts.

(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)