Dive Brief:
- Florida is launching an investigation into CVS Health and its pharmacy benefit manager Caremark, in the latest state crackdown on drug middlemen for allegedly driving up the cost of medications.
- The probe will examine claims of anticompetitive conduct, including whether the healthcare giant steers patients toward its own pharmacies at the expense of independent operators, reimburses affiliated stores more than other pharmacies for the same prescriptions and imposes burdensome audits on small pharmacies, Florida Attorney General James Uthmeier said Tuesday.
- CVS said it will work with the attorney general to address any concerns, but argued PBMs aren’t the driver of expensive medications. “Drugmakers alone set the price of prescription drugs, and blaming a PBM for high drug prices is like blaming an umbrella for the rain,” a CVS spokesperson said in a statement.
Dive Insight:
Florida joins a growing list of states looking to curb PBMs, middlemen in the drug supply chain that negotiate rebates, reimburse pharmacies and set medication formularies, over concerns the companies are contributing to the sky-high cost of drugs in the U.S.
Critics argue the biggest PBMs — CVS’ Caremark, UnitedHealth’s Optum Rx and Cigna’s Express Scripts, which jointly control 80% of all U.S. prescriptions — operate large, integrated healthcare businesses and use that leverage to profit. They say the drug middlemen steer patients toward their own pharmacies and impose arbitrary or unfair contracts on smaller pharmacies, driving independent operators out of business.
Uthmeier said CVS’ ownership of Caremark and about 800 pharmacies in Florida raise concerns the healthcare giant will give preference to its own businesses, threatening smaller pharmacies and increasing costs for patients.
The attorney general issued a civil investigative demand, a type of administrative subpoena used by government agencies to gather information and evidence.
The demand requires thousands of documents and sworn testimony on reimbursement rates, pharmacy contracts, rebates and audits, Uthmeier said. CVS has to respond by July 28.
“Florida families and seniors deserve access to affordable medication and real pharmacy choices — not a system rigged by one giant corporation that may favor its own stores and squeeze out competitors,” Uthmeier said in a statement. “This investigation will uncover the truth and protect fair competition for all Floridians.”
Other states have moved to add restrictions on PBMs. Arkansas passed a law last year banning PBMs from owning or operating pharmacies, but it was enjoined last summer following lawsuits from Express Scripts, Caremark and Optum Rx.
Tennessee also passed a similar law, which is facing legal challenges from drug middlemen and the PBM lobby.
PBMs say their work saves patients money on medications, and that pharmaceutical manufacturers are the main cause of the nation’s high drug prices. Still, the drug middlemen have faced the ire of Congress and federal antitrust regulators in recent years, including reform legislation passed into law this February and an ongoing lawsuit of the nation’s largest PBMs by the Federal Trade Commission.
