West Virginia Insurance Commissioner Allan McVey has imposed an $800,000 penalty on Navitus, a pharmacy benefit manager, in connection with allegations that the PBM violated the state's pharmacy audit, pharmacy reimbursement and rebate pass-through rules, according to an order posted on the website of the West Virginia Offices of the Insurance Commissioner.
PBMs help employer-sponsored health plans and other health coverage providers set up and run prescription drug benefits programs.
West Virginia started licensing PBMs in 2020, and regulators there have frequently imposed fines on PBMs found to be in violation of the state PBM rules.
Navitus declined to comment on the West Virginia order.
Navitus markets itself as a transparent, pass-through PBM that offers employers and other customers more detailed information than the big PBMs owned by Cigna, CVS Health and UnitedHealth offer. Navitus recently began helping the Costco Pharmacy provide "cost-plus pricing," or drugs sold with prices based on the standard wholesale price, along with a standard markup.
Navitus offered an option that would let health plans pass 100% of any rebates on to consumers when the consumers paid for their prescriptions, but no plans chose that option, according to the West Virginia order.
Instead, Navitus entered into an agreement with Prime Therapeutics, a PBM owned by Blue Cross and Blue Shield plans, to use the Ascent Health Services group purchasing organization. In connection with that arrangement, a PBM kept about $540,000 of the rebates Navitus negotiated, regulators said.
Regulators also found that, in some cases, Navitus did not pay West Virginia pharmacies a price equal to at least the national average drug acquisition cost of a drug, or NADAC, plus a $10.49 professional dispensing fee.
When helping consumers get eight prescription drugs, regulators said, Navitus paid an affiliated specialty pharmacy, Lumicera, 50% more than it paid non-affiliated pharmacies for the drugs.
"The lower reimbursement resulted in a competitive advantage for the PBM's affiliate," according to the order.
What it means: States like California and Illinois are now implementing PBM transparency requirements, and Congress has been considering legislation that could set federal PBM transparency standards.
The West Virginia PBM enforcement actions could show how enforcement actions in other states might work.
Pharmacies and drug manufacturers contend that enforcing new PBM transparency rules will help hold down the full retail prices of drugs, lead to net savings for employers and employer health plan enrollees, and help brick-and-mortar pharmacies stay in business.
The PBMs contend that enforcement of the rules will reduce PBMs' ability to control the manufacturers' and pharmacies' efforts to maximize their profit margins and will ultimately lead to increases in drug spending for employers and patients.
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