A union health plan is suing a pharmacy benefit manager owned by CVS Health over allegations that the PBM received bribes and kickbacks from drug manufacturers in exchange for good slots on health plan "formularies," or drug menus.
The plaintiff, the Roofers' Unions Welfare Trust Fund, makes those allegations in a complaint filed Wednesday in the U.S. District Court for the District of Rhode Island.
The plan is seeking to represent a class of plaintiffs that would include health insurers and self-insured employer health plans.
The defendants are the PBM — CaremarkPCS Health — and Caremark's parent, CVS Health.
CVS Health is also the parent of Aetna.
Caremark and other big PBMs have been "using their massive leverage to extract kickbacks for themselves instead of negotiating for rebates to lower their customers' drug costs," according to Peter Russell, counsel at Bernstein Litowitz Berger & Grossmann, who is representing the Roofers' health plan trust.
CVS Caremark said in a statement that it strongly disagrees with the allegations in the lawsuit and believes they are without merit.
"CVS Caremark is committed to lowering prescription drug costs for our clients and their members through negotiations with pharmaceutical manufacturers," the company said. "We intend to vigorously defend against these claims."
Formularies: A PBM helps a health coverage provider manage prescription drug benefits. A PBM can decide whether to put a drug on a health plan's formulary, and it may put the drugs on the formulary in one or more tiers.
The best formulary tier may require no payments from patients, or require a patient to provide a small co-payment.
Other tiers may require patients to pay somewhat higher or much higher co-payments.
The complaint: In the complaint, the Roofers' plan alleges that Caremark asked prescription manufacturers to make payments designated as fees to Zinc, a Caremark group purchasing organization affiliate.
Caremark said Zinc handled drug purchasing negotiations with the manufacturers.
The Roofers' plan contends that Caremark used the arrangement to increase its own revenue and reduce rebate payments to the Roofers' plan and other health plan customers.
Caremark rewarded the manufacturers for working with Zinc by putting the manufacturers' drugs on plan formularies or putting the drugs on tiers with lower co-payments, the plan said.
The plan cited reports about the difficulty Viatris had with getting Semglee, a generic version of Lantus, onto formularies, even though Semglee cost 65% less than Lantus.
The plan described the arrangements as "corrupt bribe and kickback arrangements."
The backdrop: Bernstein Litowitz, the firm that helped the plan file the suit, filed a similar suit in February on behalf of the Plumbers' Welfare Fund, Local 130. That suit, which was filed in the U.S. District Court for the Northern District of Illinois, named Express Scripts and Express Scripts' parent, Cigna, as defendants.
An answer from Express Scripts is due in court in the Illinois case April 28.
The allegations in the new complaint are similar to but somewhat different from the allegations in a massive wave of federal litigation over insulin prices.
The insulin complaints focus mainly on insulin distribution and pricing arrangements. The new suit against Caremark and the Express Script suit relate to all prescription drugs purchased through the PBMs' group purchasing organizations.
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