CVS Caremark clashes with House investigators over pharmacy hubs

The staff of a U.S. House Judiciary Committee subcommittee recently put out an interim staff report accusing CVS Caremark — the pharmacy benefit manager arm of CVS Health, which is also the parent of Aetna — of trying stifle competition from the digital pharmacy hubs.

CVS Caremark said in a statement that the report is "misguided, misleading and inaccurate," and that it's simply trying to hold health plan pharmacy costs down by applying its ordinary efforts to prevent and attack fraud, waste and abuse to in-network pharmacies that happen to use hubs, not singling out pharmacies that use hubs for special treatment.

"Caremark takes its obligation to investigate potential fraud, waste and abuse seriously," the company said.

What it means: For employers and their benefits advisors, the report means that employer plan sponsors may have to add digital pharmacy hubs to the list of drug supply-chain players that they ought to monitor.

The report: The House Judiciary interim staff report was prepared by the staff of the committee's Subcommittee on the Administrative State, Regulatory Reform and Antitrust

The inestigators who worked on the report said CVS Health had CVS Caremark send in-network pharmacies cease-and-desist letters to get them to stop working with hubs that might help patients get expensive drugs, or other drugs that could lead to use of expensive drugs.

A health plan can use a "formulary" to show what drugs it will cover.

"In cases where the plan sponsor or PBM is unwilling to modify the formulary, the plan sponsor and PBM may attempt other tactics to limit the fulfillment of certain drugs," the staffers said. "One method to limit drug fulfillment is to pressure a PBM to audit an independent pharmacy and then claw back money for the prescription when the independent pharmacy fails to satisfy the strict audit documentation requirements established by the PBM."

At CVS Health, "internal documents show that CVS Health generally did not remove these drugs from their formulary," staffers said. "Instead, CVS Health opted to pressure independent pharmacies to stop dispensing certain disfavored medications through prior authorizations, audits, and cease-and- desist letters, including when a hub pharmacy may help patients access certain drugs."

The CVS Caremark response: CVS Caremark said in its statement that it recently updated its provider manual to make it easier for its in-network pharmacies to use pharmacy hubs.

But some pharmacy hubs have faced high-profile federal investigations for fraud, including a U.S. Justice Department case that led to a pharmacy conviction in connection with a "$174 million telemedicine fraud scheme," CVS Caremark noted.

"Caremark is tasked with acting not only when it has direct evidence of fraud, but also when it has information that creates an unacceptable risk of waste or abuse," the company added. "These actions can include reviews, audits, and in the most extreme cases, termination of a pharmacy from the Caremark network for egregious conduct."

CVS Caremark uses its provider manual and manual updates to tell pharmacies about its compliance efforts, the company said.