Two manufacturers filed a lawsuit against Blue Cross and Blue Shield of Texas over alleged prescription drug rebate fraud, according to an April complaint.
Texas State Rep. James Frank, a Republican, is the CEO of Sharp Iron Group and Texas Transland, which have a self-insured model. The companies’ proposed class action alleged the insurer collected gross prescription drug costs from plan sponsors but did not disclose rebates, which could have been “hundreds of millions, and potentially billions, of dollars.” The lawsuit said this concealment could have enabled higher premiums.
“The net effect: BCBSTX presented inflated cost figures to justify higher charges, pocketed the rebate spread as pure profit, and left Texans paying for a cost structure that did not exist,” the lawsuit said.
BCBS Texas’ parent organization, Health Care Service Corp., shares ownership of its pharmacy benefit manager Prime Therapeutics. The class action’s window, beginning in 2006, also spans a period in which Prime owned AllianceRx Walgreens Prime.
Beyond fraud, the state court complaint claims conversion, unjust enrichment, fraudulent concealment, breach of fiduciary duty and Texas Deceptive Trade Practices Act violations. The companies are seeking damages, disgorgement of wrongfully retained PBM rebates, repayment of excessive premiums and fees, interest, and other costs.
“To be clear, any monetary recovery from this lawsuit will be used for the benefit of employees,” Mr. Frank said May 12 on X. “I will receive nothing personally from any judgment or settlement.” The lawsuit had explicitly said exemplary damages would go to affected employees.
BCBS Texas told Becker’s it does not comment on ongoing litigation.
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