NY Gov. Cuomo Planning Lawsuit Against Drug Industry

Sep 11, 2019

Calling it an “industry-wide conspiracy," New York Governor Andrew Cuomo has announced his intention to file a lawsuit for the over-prescription of opioids that he says has defrauded  New Yorkers out of billions of dollars.

Cuomo says his Department of Financial Services is gathering evidence for a lawsuit that he says extends beyond the drug makers to the drug distributors and pharmacies, for what the governor says is system-wide “fraud” that went on for decades. He says it cost New York consumers an estimated $2 billion. He says the costs of the overuse of the opioids was passed on to insurance premium holders in the form of rate increases.

“Which means health insurance companies were paying these prescriptions. They were then paying for the refill of the prescription. They were then paying for the emergency room when the person overdosed. They were paying for the treatment facility when the person went into treatment,” Cuomo said. “All those costs, those health insurance costs, get paid ultimately by whom? By you. That's who pays the costs.”

The governor says major pharmaceutical companies like Purdue Pharma, which manufactured the popular opioid OxyContin, have gotten away with it for decades. He says it’s cost thousands of human lives (3,000 in New York alone last year, who died from overdoses) and billions of dollars.  

“Give them one pill, they'll come back for more. How do you know? Because it’s highly addictive, which [companies] knew,” said Cuomo. “And they were right — it was highly addictive. And you killed people.”

Department of Financial Services Superintendent Linda Lacewell says her office is pursuing fines of up to $5,000 per fraudulent claim from the insurance companies that they regulate. She says her investigation is also focusing on the pharmacy benefit managers, or PBMs, who are third-party administrators, or the "middlemen," between opioid manufacturers and insurers. The PBMs set the formularies for prescription drug coverage provided by insurance policies. They also negotiate rebates and credits paid by manufacturers and distributors. Lacewell says her department has received information that some PBMs may have been paid rebates by opioid drug manufacturers, wholesalers, or distributors. In exchange, they pushed the drug to patients by placing it on a list of drugs with lower copays. Lacewell says that could in some cases be a violation of federal and state health insurance regulations. 

“There are many manufacturers and distributors and PBMs that we have already subpoenaed,” Lacewell said. "And we have also directed our insurance industry license participants to assist and cooperate, and we've sent them requests for information as well." 

The Department of Financial Services will also hold statewide hearings. Lacewell could not give a date for the filing of the lawsuit, but says they have already collected enough evidence through their investigatory work to pursue court action.

New York Attorney General Tish James is also suing Purdue, as well as Johnson & Johnson and McKesson Corporation, saying they created the opioid epidemic that has “ravaged New York, causing widespread addiction, overdose deaths, and suffering" — something the companies deny.