Sep 27, 2023
CVS Faces Lawsuit from Local Pharmacy Alleging Unfair Fees for Dispensing Drugs
, Bloomberg News
(Bloomberg) -- CVS Health Corp. was sued by a small Iowa pharmacy alleging that the health-care giant violated antitrust laws, the latest salvo in a conflict between independent drugstores and companies that manage drug plans for millions of Americans.
Osterhaus Pharmacy Inc. said in the suit that CVS’s pharmacy benefit management unit demanded unfair fees to fill and dispense prescriptions for certain Medicare beneficiaries, putting it and other independent drugstores at a competitive disadvantage. The complaint alleges that pharmacies must either sign “one-sided contracts” or lose access to millions of customers covered by the drug plans CVS manages.
A CVS spokesperson said the allegations are without merit and the company will fight them. The shares fell 3.3% at 1:23 p.m. in New York.
One of the largest drugstore chains in the US, CVS also operates Caremark, the country’s largest PBM. Big insurers including Cigna Group and UnitedHealth Group Inc. also own PBMs that negotiate with manufacturers over what their customers pay for drugs. Their role as middlemen in the high-cost pharma trade has drawn government scrutiny. The Federal Trade Commission is examining how PBMs affect drug access and affordability, and Congress is considering new rules for the industry.
Independent pharmacies have been feuding for years with PBMs over fees and reimbursement rates for dispensing medications. The complaint said thousands of independent pharmacies have signed contracts with CVS that include the fees.
Osterhaus, based in Maquoketa, Iowa, filed the suit Tuesday in federal district court in Washington state, and is seeking class action status to represent other independent pharmacies.
“PBMs have been gaming the system for a long time, and it’s time to turn the tables,” B. Douglas Hoey, chief executive officer of the National Community Pharmacists Association, which represents independent drugstores, said in a statement.
The case is Osterhaus Pharmacy Inc v. CVS Health Corporation et al, 23-cv-01500, in US District Court for the Western District of Washington.
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