CVS Hit With Generic Drug Pricing Class Action

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By Jacklyn Wille

CVS Health Corp. is the latest health company to be accused of participating in a fraudulent scheme to inflate generic drug prices and overcharge patients ( Schultz v. CVS Health Corp. , D.R.I., No. 1:17-cv-359, complaint filed 8/7/17 ).

CVS customer Megan Schultz filed a proposed class action against the company on Aug. 7, saying she was charged $169 for a generic drug that would have cost only $92 had she not used her health insurance and instead paid in cash. CVS “remained silent and took her money” because it’s participating in a fraudulent scheme with several large pharmacy benefit managers that act as intermediaries between pharmacies and health insurers, Schultz claims.

In particular, the lawsuit targets CVS’s relationship with PBMS OptumRx, CVS Caremark, Express Scripts, and MedImpact.

Health insurers UnitedHealth Group, Cigna Corp., and Humana were hit with similar class actions in the past year. The lawsuits are partly a response to an investigation into health insurance clawbacks aired by New Orleans television station Fox 8 beginning in 2016.

According to the lawsuits, when a given prescription drug costs less than a patient’s copayment amount, insurers including United Healthcare, Cigna, and Humana “claw back” the difference through an improper scheme kept hidden from patients. This causes some insured patients to pay more for prescription drugs than if they lacked insurance, the lawsuits claim.

A CVS spokesman called the lawsuit “baseless.”

“The allegations against us made in this proposed class action suit are built on a false premise and are completely without merit,” Michael J. DeAngelis, senior director of corporate communications for CVS Health, told Bloomberg BNA in an email. “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. Our pharmacists work hard to help patients obtain the lowest out-of-pocket cost available for their prescriptions. CVS has not overcharged patients for prescription co-pays, and we will vigorously defend against these baseless allegations.”

While the prior lawsuits targeted health insurers—and, in some cases, pharmacy benefit managers—this one targets CVS in its role as a pharmacy. The lawsuit claims CVS lets customers think they’re getting fair prices on prescription drugs while remaining silent about the scheme. CVS profits from the scheme in part because it drives patients into CVS stores, where they buy additional products, according to the lawsuit.

Schultz and the proposed class are represented by McIntyre Tate LLP, Hagens Berman Sobol Shapiro LLP, and Stanley Law Group.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

For More Information

The complaint is at http://src.bna.com/ruG.

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