October 2, 2017 – In a recent SEC filing, CVS Health (CVS) has disclosed just how embroiled its PBM division has become in a number of insulin price fixing investigations and lawsuits nationwide.
Two putative class action suits have been filed against CVS, along with a number of other PBMs and drug manufacturers, in the U.S. District Court for New Jersey. Plaintiffs in both cases allege that the PBMs and manufacturers have engaged in a conspiracy in which the PBMs sell access to their formularies by demanding the highest rebates, which in turn causes increased list prices for insulin. The primary claims are antitrust claims, claims under the Racketeer Influenced and Corrupt Organizations Act (RICO), and violations of state unfair competition and consumer protection laws.
The CVS quarterly filing also discloses that CVS is under investigation by a number of states for insulin price fixing. In April 2017, CVS received a Civil Investigative Demand (CID) from the Attorney General of Washington, seeking documents and information regarding pricing and rebates for insulin products in connection with a pending investigation into unfair and deceptive acts or practice regarding insulin pricing. Washington’s Attorney General advised CVS that information received in response to its CID would be shared with the Attorneys General of California, Florida and Minnesota. In July 2017, CVS also received a CID from the Attorney General of Minnesota, seeking documents and information regarding pricing and rebates for insulin and epinephrine products in connection with a pending investigation into unfair and deceptive acts or practices regarding insulin and epinephrine pricing.
CVS’s legal woes are not confined to suspicions of insulin price fixing. The company, along with other PBMs and manufacturers, also stands accused in two additional civil suits of harming glucagon kit and diabetes test strip customers. The suits claim violations under federal antitrust laws, RICO, state unfair competition and consumer protection laws, and ERISA of manipulating pricing through the use of rebate programs. An additional class action complaint was filed against CVS and other PBMs based on similar accusations of pricing-fixing with regard to EpiPens.
Closing out the laundry list of legal issues disclosed in the quarterly filing, in May 2017, the United States Attorneys’ Office for the Southern District of New York issued a CID to CVS concerning possible false claims submitted to Medicare in connection with reimbursements for prescription drugs under the Medicare Part D program.
The FisherBroyles Pharmacy and Health Care Law team is pleased to keep you updated on events of interest to those in the healthcare and pharmaceutical industries, including lawsuits and investigations related to PBMs and their business practices. Questions may be directed to any of the following attorneys: