Local Pharmacies Sue CVS and Good RX PBM

Local pharmacies assert in a recent lawsuit that they are treated differently than chain pharmacies, who get reimbursed at higher rates. Pharmacy rates are set by Pharmacy Benefit Managers, better known as PBMs.

PBMs are third-party companies that manage prescription drug benefits for health plans, employers, and Medicare Part D plans.

Over 60 PBM companies operate in the United States, with the three largest – Express Scripts (an independent publicly-traded company), CVS Caremark (the pharmacy service segment of CVS Health and a subsidiary of the CVS drugstore chain), and OptumRx (the pharmacy service segment of UnitedHealth Group Insurance) – controlling over 80% of the market.

Pharmacy Benefit Managers earn profits primarily through administrative fees charged for their services, through spread pricing (the difference between what is paid to pharmacies and the negotiated payment from health plans), and shared savings where the PBM keeps part of the rebates or discounts negotiated with drug manufacturers.

A group of Huntsville-area pharmacies have joined a class action lawsuit alleging price-fixing and anti-competitive practices by the largest pharmacy benefit management companies in the U.S.

Star Discount Pharmacy and many other small local pharmacies claim the companies have improperly fixed the amounts pharmacies are paid for reimbursements of prescription drug claims. The lawsuit argues the three largest pharmacy benefit management companies, PBMs, are responsible for 80 percent of all prescriptions filled in the U.S., and the top six handle more than 95 percent of all U.S. prescriptions.

The lawsuit names PBMs – CVS Caremark Corporation (“Caremark”), Express Scripts Holding Company (“Express Scripts”), MedImpact Healthcare Systems, Inc. (“MedImpact”), and Navitus Health Solutions, LLC, along with prescription drug card aggregator GoodRx.

Trent McLemore from Star Discount Pharmacy says PBMs do not take into account the pharmacy or the patient.

“It doesn’t process through the patient’s PBM, it processes through Good RX to find a different price that both benefits Good RX and the PBM,” said McLemore.

This can make rates so low that pharmacies can’t even cover the cost of selling the drug.

Bobby Giles from the Alabama Pharmacy Association says that it is a pharmacist’s job to take care of their patient but with the way things are going that may become a struggle.

“The number one objective of a pharmacist is to take care of their patient. Under the current business model that has been established out there for us to practice under we are not being allowed to do that,” said Giles.

Eric Artrip is the attorney representing the local pharmacies in this lawsuit.

“That is going to have a significant impact, especially on rural communities,” said Artrip. “Now instead of people driving 10 to 15 minutes to get their prescriptions are going to have to drive 30 minutes, 45 minutes or even an hour.”

The plaintiffs’ lawsuit asks the court to:

• Find that the defendants have conspired to fix reimbursements to plaintiffs at artificially low levels;
• Bar the defendants from continuing the alleged anti-competitive practices;
• Award the plaintiffs triple the damages they have sustained, along with awarding other costs.

Kris Gates, connect@healthendeavors.com