Class Action Lawsuit Filed Against CVS Caremark to Recoup DIR Fees
The class action lawsuit against CVS Health, Caremark, and Aetna was announced earlier today.
A class action lawsuit has been filed against vertically consolidated businesses CVS Health, Caremark, and Aetna with the goal to “recoup for independent pharmacies millions of dollars” in what lawyers are calling “wrongful back-end penalties for Medicare Part D prescriptions,” or direct and indirect remuneration (DIR) fees, according to a press release from the National Community Pharmacists Association (NCPA).1
The lawsuit was announced today by Berger Montague PC and Cohen & Gresser LLP. The lawsuit claims that Caremark, which is the largest pharmacy benefit manager (PBM) in the country, as well as a subsidiary of CVS Health, has “been assessing pharmacy DIR fees in violation of federal antitrust laws and state laws governing contracts. The lawsuit also poses a challenge to “Caremark’s agreements to arbitrate claims as being unfair and unenforceable.”
“Finally, community pharmacies have a chance to recover DIR fees that were unfairly taken,” said B. Douglas Hey, NCPA CEO, in the news release. “PBMs have been gaming the system for a long time, and it’s time to turn the tables.”
In a statement to Formulary Watch, a CVS Health spokesperson said, “We believe the allegations are without merit, and intend to defend ourselves vigorously.”
In 2021 and 2022, arbitrations were successfully awarded to litigants against Caremark. In 2021, a judgment of $23 million was awarded to the AIDS Healthcare Foundation after finding that Caremark “breached the covenant of good faith and fairness” in implementing DIR practices. In 2022, another judgment of $2.1 million was awarded in wrongfully collected fees, as well as an additional $1.5 million in attorney’s fees and interests, due to the Caremark contract being “unconscionable.” Two district courts confirmed these awards in 2022 and 2023, respectively.
According to NCPA, Caremark has “done nothing to change its ways, other than to modify its dispute resolution process to make it more expensive and more difficult for pharmacies to bring claims against them.”
“The arbitration process keeps these cases secret,” Hoey said. “That allows Caremark and the other PBMs to continue to treat pharmacies unfairly and illegally extract junk fees. We are hoping this lawsuit helps to bring these unlawful practices into public view.”
DIR fees have risen over 107,400% in recent years, Hoey added, creating untenable financial situations for many community pharmacies. Many of these fees, totaling in the hundreds of thousands of dollars, are difficult, if not impossible to anticipate.
According to the release, NCPA has worked with Berger Montague PC and Cohen & Gresser LLP, as well as several others, for more than a year to educate the firms on the anticompetitive behaviors of PBMs. “Now,” Hoey said, “we’ll focus on educating our members about the suit and other ways they can recoup the fees that were taken from them wrongfully.”
Lawyers from both firms will be in attendance at the NCPA Annual Convention, taking place October 14 to 17 in Orlando, Florida.
Reference
Payback time! Community pharmacists cheer class action lawsuit against PBMs to recoup DIR fees. News release. National Community Pharmacists Association. September 27, 2023. Accessed September 27, 2023. https://ncpa.org/newsroom/news-releases/2023/09/27/payback-time-community-pharmacists-cheer-class-action-lawsuit
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