CVS accused of ‘ripping off’ healthcare providers in antitrust lawsuit

New York Attorney General Letitia James is suing CVS Health Corporation (CVS) for violating antitrust laws and financially harming hospitals and clinics that provide care to underserved communities, her office announced Thursday.

For years, CVS required safety net providers in New York to use a company exclusively owned by CVS, Wellpartner, to process and receive federal subsidies for prescriptions filled at CVS pharmacies, according to the lawsuit.

The attorney general’s office alleges that CVS’s scheme forced suppliers to absorb millions in additional costs while CVS continued to benefit through its subsidiary. CVS’s policies deprive health practices of critical federal funding that could be used to improve and expand patient care, the lawsuit states.

Through her lawsuit, James seeks to end what her office considers CVS’s unfair and illegal practices and recover lost revenue for affected hospitals and safety net clinics that would improve health care services.

“While safety net healthcare providers are addressing public health crises and helping underserved communities, CVS is robbing them of millions in desperately needed funds that could improve patient care,” James said in a statement. “CVS’s actions are a clear example of a large corporation using its influence and power to take advantage of institutions and vulnerable New Yorkers, but my office will not allow it.”

CVS prevented New York City’s safety-net hospitals and clinics from using a company of their choice to receive subsidies for prescriptions filled at CVS pharmacies through the federal 340B program, according to the filings. This program allows safety net hospitals and clinics to buy certain drugs at a discount from pharmaceutical companies and use the savings for patient care.

To realize the benefits of the 340B program, safety net hospitals and clinics must contract with the pharmacies that are used by their patients. Under CVS’s requirements, thousands of safety net health care providers across the state were allowed to use Wellpartner only to process claims submitted to CVS retail and specialty pharmacies, forcing them to absorb millions of dollars in additional costs of hiring and training staff and changing their data systems to align with Wellpartner’s system, according to the lawsuit.

The lawsuit alleges that New York patients were the ultimate victims of CVS’s practice, which drained federal funding from health care providers that could have used the funds to improve access to health care for New Yorkers most in need — including the poor and the uninsured.

More than 4,440 safety net health care providers are enrolled in the 340B program in New York by 2021. These include federally qualified health centers, critical access hospitals, HIV/AIDS clinics, rural referral centers, single community hospitals, clinics for black lung, community health centers, family planning clinics and tuberculosis clinics. These facilities primarily treat low-income patients and rely on $340 billion in savings to fund patient care services for underserved and vulnerable populations.

Safety net health care providers have full legal responsibility for record keeping and can collect only 340 billion in certain prescription revenues, including patient prescriptions for drugs used to treat HIV/AIDS and hepatitis C. Most network providers for safety contracts with a third party administrator, or TPA, to administer their 340B programs. TPAs verify eligibility for each transaction and maintain detailed records as required by federal 340B program rules.

In 2017, CVS acquired Wellpartner, a TPA, and began requiring New York hospitals to use it. An investigation by the attorney general’s office found that CVS pharmacies did not contract with hospitals that did not use Wellpartner as their TPA, a violation of New York antitrust laws.

The 340B program rules do not allow hospitals to divert patients from certain pharmacies. Hospitals and clinics had little choice – either they had to agree to CVS’s demands or forgo the benefits they were entitled to, according to the claim.

CVS tried to use the power of its New York pharmacy network to force hospitals to use Wellpartner rather than any other TPA, James’ office said.

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