Medco, Caremark Itching to Play Medicare Card

Indeed, the nation's largest PBM officially welcomed the opportunity to serve the huge Medicare crowd. Medco pointed to its new Medicare-approved discount drug card as "an important first step" in bringing affordable prescription drugs to senior citizens.

"We intend to leverage our size and scale for the Medicare population, just as we do for our other clients today, to deliver a total solution -- best price and value, and a clinical excellence program designed for the unique issues confronted by seniors," Medco CEO David Snow announced last week. (Medco is the pharmacy benefit manager for TheStreet.com Inc. (TSCM Quote), publisher of this Web site.)

Medco could use some new opportunities right now. Lately, it has been losing existing business to major competitors. In recent months, the company has watched some of its biggest customers -- most notably the federal government -- choose Caremark or AdvancePCS, two big benefit managers that recently merged, as their PBM instead.

Medco lost the big contracts after federal authorities sued the company for allegedly defrauding government customers by failing to properly fill their prescriptions and charging them for medicine they never received. But Caremark, the surviving entity of last week's merger, faces similar allegations as well. Moreover, it also has been accused of reselling returned drugs and then booking the profits twice.

For its part, Caremark has consistently denied any wrongdoing. But the company recently went a step further, one Chicago attorney says, by filing a lawsuit against its accuser.

Mike Leonard, who is representing two Caremark pharmacists in a whisteblower lawsuit, said Caremark is now accusing one of his clients of improperly taking documents from the company.

"It appears to be a desperate act by a company that knows that there are documents out there that evidence its alleged fraud," Leonard stated. "Also ... in my opinion, it appears that Caremark is trying to send a message to its other employees not to cooperate in this suit and making it clear, at least by way of implication, that if they do, they too might be sued by Caremark."