A state investigation is expected to lead to legal action against pharmacy benefit managers, Attorney General Mike DeWine announced Monday.

In a statement, the AG said his office has been investigating the pharmacy industry middlemen and their contracts with state agencies, including Medicaid, the Bureau of Workers’ Compensation and pension plans, since late last year.

“It is clear that the conduct by PBMs in these areas remains a major concern, and we anticipate that our investigation will result in major litigation against PBMs,” he said in a statement.

The AG’s office has begun hiring outside counsel for the investigation and expects to announce that selection soon.

“Today, I am putting the PBMs on notice that their conduct is being heavily scrutinized, and any action that can be taken and proven in court will be filed to protect Ohio taxpayers and the millions of Ohioans who rely on the pharmacy benefits provided,” Mr. DeWine said. “Just as Ohio and other states have taken previous action against PBMs in other matters, Ohio will not hesitate to be the first state to demand accountability from PBMs for this pattern of conduct.”

The statement comes as CVS Caremark, a PBM that contracts with several of the state’s Medicaid managed care plans, is challenging the state in court to prevent the release of a report detailing PBM activity in Medicaid.

A hearing regarding a requested temporary restraining order in that case is set for 2 p.m. Wednesday before Franklin County Common Pleas Judge Jenifer French.

ODM commissioned HealthPlan Data Solutions to examine the difference between what managed care plans paid PBMs and what pharmacies received, known as the “spread.” The executive summary, released in June, reported PBMs received more than $223.7 million from the Medicaid program through the spread over the previous year.

Caremark argued against the release of the full report commissioned by ODM, saying it contains proprietary information.

“The Proprietary Information would lose its value if the Proprietary Information were publicly disclosed, allowing Caremark’s competitors and potential customers access to the Proprietary Information,” the company said in its complaint. “In fact, disclosure of the Proprietary Information would give Caremark’s competitors an advantage over Caremark in subsequent contract negotiations with potential customers and would give Caremark’s potential customers an advantage over Caremark in subsequent contract negotiations.”

The company requested an injunction and a declaratory judgment to protect trade secrets.

“Caremark is entitled to a judgment declaring that the Report, and the Proprietary Information, contains trade secret information and barring ODM from disclosing this trade secret information in any manner,” the company said.

The lawsuit drew criticism from Sen. Vernon Sykes (D-Akron), a member of the Joint Medicaid Oversight Committee and one of several members of that panel to have voiced concerns with how much the Medicaid program pays PBMs.

“For too long, pharmacy benefit managers have operated in the shadows with very little oversight. Releasing this report will help to bring their actions to light,” he said in a statement. “CVS Caremark claims they are trying to protect proprietary information, but what they’re really worried about is Ohioans realizing how badly they’re getting ripped off.”