Consumers in NY Overpaid $2B in Insurance Premiums Because of Opioid Crisis, State Says
The state Department of Financial Services said it's now issued subpoenas and other document requests to more than 50 opioid companies, insurers and pharmacy benefit managers in an effort to seek restitution from the industry.
September 10, 2019 at 06:16 PM
4 minute read
New York's financial regulatory agency said Tuesday that it estimates consumers in New York have overpaid an estimated $2 billion in insurance premiums over the past decade because of the state's opioid addiction epidemic.
The state Department of Financial Services said it's now issued subpoenas and other document requests to more than 50 opioid companies, insurers and pharmacy benefit managers in an effort to seek restitution from the industry.
Requests were also made to individual members of the Sackler family, who own Purdue Pharma—the manufacturer of oxycontin that's been the subject of countless lawsuits over the opioid epidemic.
State officials from New York claimed Tuesday that misrepresentations about the safety of opioids by the industry has led to more of those drugs being prescribed than necessary, as well as more people seeking treatment for addiction and other associated adverse health effects.
That's driven up insurance premiums for consumers in New York to the tune of $2 billion, Gov. Andrew Cuomo and DFS Superintendent Linda Lacewell said.
"Any intentional misrepresentation by the manufacturers and distributors of opioids and PBMs would have led to great financial burden for consumers and New York state-licensed health insurers," Lacewell said. "DFS is charged with oversight of New York's insurance industry and rate review for consumers and express authority to investigate insurance fraud."
DFS is now planning to seek fines and restitution from the opioid industry, and is directing state-regulated insurers to fully cooperate with those actions. The agency will also hold hearings across the state on how the opioid crisis has affected the health insurance system.
The New York Health Plan Association, a trade group that represents some of the insurers targeted through the action, said its members are discussing how to best provide the state with the information that's been requested.
"HPA and our member plans share the concerns expressed by the governor and the department about the opioid crisis' effect on New Yorkers," said Eric Linzer, president of NYHPA. "We are currently having discussions with the department about its information request to ensure that plans are able to provide the necessary data for this review."
Pharmacy benefit managers are a new focus for the state's investigation into the opioid industry. The Legislature approved a bill earlier this year requiring them, for the first time, to regularly register with DFS.
The agency said it's recently received information that some pharmacy benefit managers may have been paid rebates by opioid manufacturers, wholesalers and distributors in exchange for placing those drugs in prescription tiers with lower co-pays.
Under certain circumstances, that can violate federal and state health insurance regulations, DFS claimed.
Gov. Andrew Cuomo, who announced the action Tuesday, said the state was taking action for consumers because the financial damage caused was allegedly intentional on the part of the opioid industry.
"The opioid scandal, the opioid scheme, is as diabolical, as brazen, as obnoxious and as offensive as anything I have seen," Cuomo said. "They knew what they were doing. This was not accidental."
The announcement builds on other action taken against the opioid industry by New York, including a lawsuit from the New York Attorney General's Office against opioid manufacturers and distributors in the commercial division of Suffolk County Supreme Court.
That litigation, which was among the first to target distributors alongside manufacturers, is ongoing. It's separate from a massive collection of lawsuits currently being hashed out against companies in the opioid industry as part of a multidistrict litigation in Ohio.
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