Montana Regulators Propose Fines Against Pharmacy Benefits Managers

State regulators are proposing fines against two companies that manage pharmacy benefits for health insurers, saying they operated in Montana without a license.

The alleged violations were discovered while the office of the Commissioner of Securities and Insurance was gathering information for an interim legislative committee that was tasked with studying the reasons for the rising costs of prescription drugs and if there was anything the state could do about it.

Prime Therapeutics has operated without a license since 2013, and two subsidiaries of Express Scripts were unlicensed while handling claims from 2013 to 2017, state Auditor and Insurance Commissioner Matt Rosendale said. The companies also have failed to fully comply with requests for copies of contracts and pricing data sought by lawmakers, he said.

“These companies need to understand that we are serious about consumer protection and that they will be held accountable for their actions,” Rosendale said in a statement Wednesday.

Prime applied for a license in April. But it has not provided the information sought by the state so the commissioner’s office declined to issue a license.

Karen Lyons, spokeswoman for Prime Therapeutics, said the company has been working with the commissioner’s office for the past year to respond to the agency’s request for information and to address licensing concerns.

Brian Henry, an attorney for Express Scripts, said the company was still reviewing the administrative filing, but that it plans to defend itself vigorously.

Both companies can ask for hearings on the licensure issue and proposed fines, which could total up to $30,000 for each violation of the Montana Insurance Code.

Prime Therapeutics is owned by Health Care Service Corporation, the parent company of Blue Cross and Blue Shield of Montana. It has handled nearly 6 million claims for Blue Cross in Montana since 2013, each of which could be considered a code violation, the commissioner’s office said. Express Scripts handled claims for the Montana Health CO-OP.

Pharmacy benefit managers are third-party administrators of prescription drug programs. They negotiate contracts among pharmacy groups, drug manufacturers and insurance companies in an effort to reduce the cost of prescriptions.

The Children, Families, Health and Human Services Interim Committee decided Friday that because the federal government regulates the manufacture and sale of prescription drugs, individual states have little recourse to bring down prices on their own. Committee members recommended state agencies – including the insurance commissioner and those that administer health benefits – continue to review the options available to them for reducing drug prices, and that the agencies propose legislation to curb costs or make them more transparent.