Rhode Island Attorney General Peter Neronha ratcheted up his years-long advocacy on health care Tuesday by unveiling a series of steps meant to address the state’s health care crisis, including a newly filed lawsuit accusing the nation’s three largest pharmacy benefit managers of driving up prescription costs.
“We allege that they effectively extort manufacturers of pharmaceuticals through a rebate program to drive prices up,” Neronha said during an almost two-hour news conference at his Providence office. “And when the prices go up, the PBMs take the profit. So effectively, because they have 80% of the market, they’re able to use that market power to drive drug prices sky high and keep that difference.”
PBMsS act as middlemen between prescription makers and pharmacies. The three sued by Neronha in Superior Court are CVS Caremark, Express Scripts and OptumRX.
In a statement, Amy Thibault, a spokeswoman for Woonsocket-based CVS, said Neronha used biased and incorrect assertions to criticize a local corporation that she said contributes nearly $3 billion in economic activity to Rhode Island each year.
“As America’s leading pharmacy benefit manager, CVS Caremark puts medicine within reach by lowering costs and broadening access,” Thibault said. “Just last year alone, we saved Americans more than $40 billion on their prescription drug costs. Our members pay, on average, less than $8 per 30-day supply of medication.”
The steps announced by Neronha amount to a significant escalation on his longstanding warnings that more leadership is needed to address Rhode Island’s health care crisis.
Symptoms of the crisis include a lack of primary care doctors, troubled hospital finances, and lower reimbursement for public and private insurance than in neighboring Connecticut and Massachusetts.
“We are in a state today of spectacular failure that is literally occurring before our eyes,” Neronha said, “and while some or most of us see it — the canaries are in the coalmine … — but somehow when we go to 50,000 feet we’re not ready to treat the problem as seriously as it is and in a sense suffer the pain that it’s going to take to fix it.”
The steps unveiled by the prosecutor include:
- Introducing legislation to raise primary care reimbursement for Medicaid to the same level as Medicare in the state. Neronha did not cite a funding source to pay for it, but said the money should be found in a $14 billion state budget.
- Collaborating with Brown University School of Public Health’s Center for Advancing Health Policy Through Research (CAHPR) to consider new health system reforms, including a single-payer plan
- Backing legislation to eliminate most prior authorizations by insurers for primary care.
- Supporting legislation to allow the attorney general to petition the Superior Court to place a hospital in receivership if it becomes financially unstable.
- Issue a notice of proposed rulemaking governing the use of artificial intelligence in health care.
- Planning for a new state health care agency to analyze data and inform government health care decisions.
Representatives of health care companies, organized labor and the General Assembly attended Neronha’s news conference.
In 2021, Neronha required Prospect Medical Holdings, a California-based private equity firm, to submit $80 million in escrow to complete a change in its ownership structure.
The Centurion Foundation, an Atlanta-based nonprofit, is trying to complete its purchase from Prospect of Roger Williams Medical Center in Providence and Our Lady of Fatima Hospital in North Providence.
Bonds are being sold in an attempt to finance the deal, and Neronha said the future of the hospitals remain “on a knife’s edge.”
Neronha was joined by members of his health care unit. He thanked House Speaker Joe Shekarchi and the late Dominick Ruggerio, the former Senate president, for supporting the funding to roughly double the size of that unit.
