CVS Pharmacy.

CVS has been hit with at least three federal class actions, including two antitrust cases accusing CVS Caremark Corp. and other pharmacy benefit managers, the intermediaries between insurance companies and pharmacies, of price-fixing prescription drug reimbursement rates.

The named defendants, GoodRx Inc.; GoodRx Holdings Inc.; CVS Caremark; Express Scripts Holding Co.; MedImpact Healthcare Systems Inc.; and Navitus Health Solutions LLC, were sued by Philadelphia Association of Retail Druggists in Rhode Island District Court and Esco Drug Co. in the Central District of California.

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"Each of the PBM Defendants is a wholly owned subsidiary of a health care conglomerate that also owns mail-order, specialty, and/or retail pharmacies, large health insurance companies, and other players in the market for prescription dispensing services," the Philadelphia Association of Retail Druggists argued.

The plaintiffs, both independent pharmacies, claimed the defendants "have vertically integrated" with health care giants such as insurance companies, health care providers, drug private labelers and others. As a result, the complaints say, pharmacy benefits managers use anticompetitive methods to suppress reimbursements for discount card payments, which allegedly causes stand-alone pharmacies to suffer and even go out of business.

Class actions with similar claims have popped up across the United States, but the government has also scrutinized the health care conglomerates. On Dec. 11, bipartisan legislation was brought forward by Sens. Elizabeth Warren, D-Massachusetts, Josh Hawley, R-Missouri, and U.S. Reps. Diana Harshbarger, R-Tennessee, and Jake Auchincloss, D-Massachusetts, to ban the "joint ownership" of pharmacy benefit managers and pharmacies.

"As a life-long pharmacist, I know firsthand how unchecked PBM consolidation and vertical integration have allowed these shadowy middlemen to self-deal and manipulate the system in ways that are driving up drug costs, limiting patient choices, and putting the financial screws to independent community pharmacies,” Harshbarger said. “I’m a proud conservative Republican, but we have antitrust laws for a reason. … Federal regulators should never have let this excessive concentration of our health care industry happen in the first place, and so it’s up to Congress to get the job done.”

In addition, the Federal Trade Commission released an interim report on July 9 that examined how six major pharmacy benefit managers, CVS Caremark, Optum Rx, Humana, MedImpact, Prime Therapeutics and Express Scripts, have affected drug prices and accessibility.

According to the FTC, the report showed patients were being overcharged for drugs and harming independent pharmacies by including terms in the contract that leave small businesses at a disadvantage.

In response, Cigna subsidiary Express Scripts sued the FTC for defamation and provided its own report funded by pharmacy benefit managers that shows contrasting findings.

Express Scripts rejected the premise of the lawsuits as "categorically false."

"Our partnership with GoodRx helps promote lower prices for patients at the pharmacy counter by directly integrating discount card pricing with customers’ pharmacy benefits," the company said in a statement. "This program is an important part of our work to protect people from high drug costs, particularly for those with high deductible plans."

Antitrust economist Dennis Carlton wrote the report and concluded pharmacy benefit managers actually "foster competition" to reduce drug costs.

The most recent lawsuits accused the defendants of violating the Sherman Act, and asked the court to enjoin the defendants from their alleged anticompetitive practices.-

"As a direct result of the conduct described herein, pharmacies were injured by receiving decreased reimbursement for dispensing generic prescription drugs and paying increased fees to PBMs and GoodRx resulting from discount card transactions," Philadelphia Association of Retail Druggists claimed. "This has contributed to the closure of hundreds of independent pharmacies, thus lessening competition in the prescription drug dispensing market. And in the end, consumers will suffer as these restraints on competition lead to fewer pharmacy choices, lower quality services, and higher health care costs."

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Emily Cousins

I'm a litigation reporter for Connecticut Law Tribune, covering litigation wins, verdict news, settlements, interesting cases, etc. Contact me with tips at [email protected].