- Pharmacy startup Blink Health’s lawsuit with its former business partner MedImpact is heating up.
- In a new complaint filed Monday night, Blink Health alleged that MedImpact is a “peddler of opioids” through its cash discount card programs.
- MedImpact’s cash discount cards, Blink Health alleges, often skew toward buying prescriptions like opioids.
A lawsuit between a pharmacy startup and its former business partner is heating up.
On Monday, Blink Health filed a new complaint to a breach of contract lawsuit that’s been ongoing between the New York-based company and MedImpact, the largest private pharmacy benefit manager. In it, Blink alleged that MedImpact is a “peddler of opioids” through the cash discount card program it runs.
PBMs negotiate drug prices on behalf of health plans and employers in the form of rebates off the list price of branded medications. But for patients who aren’t insured – or who face high prices out of pocket because of high deductible plans – PBMs often reach them as well through something called cash discount cards.
Different from the coupons drugmakers use to provide discounts to their branded prescriptions, patients with a generic drug prescription looking for a lower price might do a quick internet search to look for a discount card and pull up these cash discount cards. The cards supply the user with a discount to the list price when it’s plugged in at the pharmacy counter, though the amount patients end up paying may be higher than the cash price the pharmacy might have charged. When they’re used, a cut of the prescription sale goes to the PBM, as well as the data about the identity of the person who used that card.
But, Blink alleges, these cash discount cards also have potential for misuse by people looking to abuse prescriptions including opioids. Because the transactions don’t go through insurance, there’s a larger potential for people to get a prescription under a different name and use a coupon to purchase that drug.
And these cash discount cards can be a big business for PBMs. Blink alleges that a large portion of MedImpact’s income comes from these types of cards, and that the cards tend to be used more frequently for Schedule II controlled substances, like opioids.
A representative for MedImpact did not immediately return a request for comment about Blink’s allegations.
Blink, which also offers discounts for people paying with cash, operates a little differently. Instead of shopping around among pharmacies nearby for the cheapest price, Blink negotiates to get the same price at different pharmacies for generic medications and some branded diabetes medications.
In Blink’s app, you can find your prescription and purchase it directly through the app. Then, when you get to the pharmacy counter, you show your phone to the pharmacist who rings it up instead. In return, Blink gets a cut of the transaction. Because users have to be logged into Blink’s app to purchase the card, it can help mitigate some of the anonymity people use to purchase opioid prescriptions for misuse.
Between 1999 and 2016, more than 200,000 people in the USdied from overdoses related to prescription opioids. President Donald Trump last year declared the opioid epidemic a public-health emergency, escalating the amount of attention and funding that can go toward addressing the issue.
There’s been a fair amount of finger-pointing among the pharmaceutical industry as to how much a role each part of the supply chain had in fuelling the opioid crisis, from drugmakers to wholesalers that distribute the drugs, to insurers. For their part, PBMs have mainly stayed out of the spotlight.
Litigation over the breach of contract has been ongoing since November 2017, when Blink filed a complaint alleging that MedImpact allowed major pharmacies including CVS to leave its network. MedImpact denied these allegations in March and filed a counterclaim against Blink.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.