NASP Supports Lawsuit Against CVS Alleging Customers Were Overcharged for Certain Drugs

The District Court of Rhode Island filed a class-action lawsuit against CVS Health alleging the company conspired with pharmacy benefit managers (PBMs) to increase profits and inflate the cost of generic drugs.

Annually, CVS generates $10.3 billion in profits from prescription drugs. The company states that it provides affordable drugs for patients; however, the new lawsuit alleges that CVS customers are not receiving the most affordable drugs due to a scheme that overcharges them for certain generic drugs.

The court alleges that CVS deliberately overcharges for certain drugs when patients use insurance compared with patients who pay cash.

In the suit, plaintiff Megan Shultz said that she paid $165.68 with insurance for a drug, but only would have had to pay $92 in cash. Shultz said that CVS did not inform her that she would save money by bypassing her insurance. The court alleges that CVS’ silence was the result of a fraudulent scheme with large PBMs.

CVS said in an emailed statement to Specialty Pharmacy Times that the suit contains baseless allegations.

"The allegations against us made in this proposed class action suit are built on a false premise and are completely without merit," the statement read. "Co-pays for prescription medications are determined by a patient’s prescription coverage plan, not by the pharmacy. Pharmacies collect the co-pays that are set by the coverage plans."

Another aspect of the alleged scheme involves overcharging patients through high co-payments that exceed the price and profit of the drugs. After collecting the fee, CVS allegedly forwards the excess money to the PBM, according to the lawsuit.

The National Association of Specialty Pharmacy (NASP), which advocates on behalf of more than 100 corporate members and 1200 individuals, recently issued a statement in support of the suit.

“Fraud, waste and abuse is one of the single most important drivers of escalating costs in any business, and health care is no exception. Especially in matters of life or death—like health care—fraud, waste and abuse of any kind should not be tolerated,” NASP Executive Director Sheila Arquette said in a press release. “Escalating healthcare costs consistently ranks as one of the top things keeping Americans up at night, and the effects reach beyond patients, as well as the healthcare providers and pharmacies that work to keep them as healthy as possible.”

The lawsuit alleges that CVS was motivated by profit to enter into these contracts with PBMs to increase drug costs for patients. Since these contracts are extremely secretive and PBMs are largely unregulated, it can be difficult for patients and health care providers to navigate drug costs.

“NASP will continuing working with Washington, individual states, and others in the health care delivery channel to institute reforms that will not only benefit patients and health care providers, but taxpayers alike,” Arquette said.

Under the Employee Retirement Income Security Act of 174, CVS and entities that control assets of health plan enrollees have a fiduciary duty to the individuals and is obligated to provide services in the best interest of its customers, according to the suit.

By engaging in an alleged scheme, the district court charges that CVS is in violation of their responsibilities.

The lawsuit aims to permanently stop CVS from engaging in the aforementioned practices; cost, restitution, damages, and disgorgement to be determined at trial; treble damages and attorney fees, pre- and post-judgement interest; and other relief at law or equity the court deems acceptable,.

“We are at the table, eager to find actionable solutions to ensure the highest quality care and patient satisfaction possible, especially when it comes to providing affordable medications and support services for patients, their families and caregivers as they work to manage tough conditions,” Arquette concluded. “We hope big PBMs will join us at the table, so we can work together to contain prescription drug costs. More transparency from big PBMs, along with others in the prescription drug supply chain, are critical to this important effort.”

However, CVS denies the allegations.

"Our pharmacists work hard to help patients obtain the lowest out-of-pocket cost available for their prescriptions," CVS told Specialty Pharmacy Times. "Also, our PBM CVS Caremark does not engage in the practice of co-pay clawbacks. CVS has not overcharged patients for prescription co-pays, and we will vigorously defend against these baseless allegations."