Community pharmacies in a new lawsuit claim CVS Health and its Caremark pharmacy benefit manager violated antitrust laws and illegally collected fees from pharmacies that fill Medicare prescriptions.
Why it matters: If the Iowa pharmacy leading the lawsuit prevails, CVS will have to return hundreds of millions — if not billions — of dollars its PBM recouped from independent pharmacies over the past four years, according to a lawyer for the National Community Pharmacists Association.
The lawsuit comes as CVS Caremark and other PBMs face heat from Congress for their business practices. Bipartisan legislation addressing PBM transparency could be brought to a vote later this year.
Driving the news: Osterhaus Pharmacy in Maquoketa, Iowa, claims the fees CVS Caremark has been charging independent pharmacies under a Medicare value-based contracting program violate federal antitrust laws and state contract statutes.
The company filed a proposed class-action lawsuit in the Western District of Washington this week.
Caremark believes the allegations are meritless and will defend itself vigorously, a spokesperson told Axios.
Catch up quick: Medicare prescription drug plans and their PBMs can adjust how much they reimburse pharmacies for dispensing Part D drugs based on the pharmacies' quality performance. Adjustments often come weeks or months after the sale of a drug.
The lawsuit claims Caremark exploits the pay-for-performance system by delaying its adjustments "without a legitimate reason."
Many of the performance criteria Caremark uses make no sense for pharmacies, the lawsuit says. But opting out of a contracting arrangement with Caremark would "severely limit a pharmacy's access to a critical mass of patients," the lawsuit states.
What they're saying: The performance adjustment fees "do nothing more than line the pockets of PBMs like Caremark. It's a mafia-style shakedown," Douglas Hoey, CEO of the National Community Pharmacists Association, said in a statement.
The lawsuit is a "chance to claw back the clawbacks," NPCA's statement said.
By the numbers: Retroactive quality performance fees grew by more than 107,400% between 2010 and 2020, the Centers for Medicare and Medicaid Services reported last year.
Of note: Starting January 1, Medicare prescription drug plans and PBMs will not be able to retroactively recoup performance-based adjustment fees from pharmacies.
PBMs will still be able to adjust pharmacy reimbursement for quality performance at the point of sale.
Axios go deeper: How a slate of PBM reforms could impact the pharmacy business
Reporter: Maya Goldman, author of Axios Vitals