Ex-pharmacy benefit manager CEO pleads guilty to paying kickbacks

Feb 15, 2017
Pharmacist Kyle Fields counts pills at Waynesville Pharmacy, Dec. 2, 2016. The Dayton Daily News has been digging into the complex system behind how prescription drugs get priced. KATIE WEDELL/STAFF

The former chief executive of a Nebraska pharmaceutical benefits manager company has pleaded guilty to making illegal kickback payments in order to obtain business from employer health plans.

Douglas Pick, 57, pleaded guilty in federal court in Tyler, Texas, on Monday to making unlawful kickback payments, and his former company, Pharmaceutical Technologies Inc., agreed to pay more than $8.5 million as part of a non-prosecution agreement with the U.S. Attorney’s Office.

The Dayton Daily News has been reporting on the role of pharmacy benefit managers as part of a series on rising prescription drug prices.

READ MORE: Who’s really controlling your drug prices? 5 things to know about pharmacy benefit managers

PBMs work on behalf of health plan sponsors to negotiate rebates from drug makers and administer prescription benefits. They have control over which drugs a health plan will cover, how much out-of-pocket patients will pay and which pharmacy members can use.

PBMs have been criticized for a lack of transparency in their negotiations with drug makers and accused in lawsuits of inflating drug prices. PBMs say they save health plans millions by negotiating large rebates and driving members to the lowest cost drug options.

RELATED: Consumers kept in the dark over drug prices

Pharmaceutical Technologies paid individuals kickbacks to steer health plan business to it, the case revealed.

In one example Tom Slack, CEO of Tyler-based HealthFirst, was paid more than $1.5 million to ensure Pharmaceutical Technologies kept its contract to administer pharmacy benefits for HealthFirst plans.

IN-DEPTH REPORT: Read and watch the full investigation into prescription drug prices

The agreement specified that HealthFirst would pay PTI an administrative fee for every claim made for the filling of prescriptions, according to the U.S. Attorney’s Office, Eastern District of Texas.

“Slack expressed to Pick that he wanted to personally receive money on the pharmacy business from HealthFirst in exchange for directing more business to PTI and automatic renewal of the PTI-HealthFirst agreement each year,” a statement from the district office said. “To do so, Pick and Slack agreed that Slack would approve an increase of the PTI administrative fee imposed on HealthFirst’s clients for each prescription filled. PTI would then pay the increase to a shell company that Slack had established.”


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