CVS Caremark agrees to settle transaction fees

The Oklahoma Department of Insurance has reached a settlement agreement with CVS Caremark regarding transaction fees the pharmacy benefits manager charges pharmacists for processing Medicare Part D and group health plan claims, the agency said Thursday.

Subsidiary CVS Health will pay $4.8 million to settle alleged violations of the state law on the right of patients to choose a pharmacy. CVS Caremark will pay $2.3 million in damages to pharmacies and $2.5 million in fines to the state.

“CVS Caremark cooperated during our investigation, we were able to work together during negotiations to ensure a level playing field that respects the rules [Patient’s Right to Pharmacy Choice Act] and other PBM legislation,” Oklahoma State Insurance Commissioner Glen Mulready (R) said in a press release. “With the rising cost of healthcare during a pandemic, it’s more important than ever to ensure that companies fully comply with our laws to protect consumers and other businesses.”

CVS Caremark did not respond to requests for comment.

However, the Oklahoma law underlying the CVS Caremark settlement is the subject of a federal litigation. The Pharmaceutical Care Management Association, a PBM industry group, has filed suit alleging that the federal Employee Retirement Act, which governs workplace benefit programs, takes precedence over state law. If plaintiff won, CVS Caremark would not have to pay Oklahoma or the pharmacies. CVS Health is a member of the PCMA.

In November, a federal appeals court ruled that a North Dakota law that sets requirements for pharmacy managers is consistent with ERISA, which could set a precedent for such lawsuits. North Dakota prohibits companies like CVS Caremark from owning stakes in patient care programs or specialty mail-order pharmacies.

Although it upheld the North Dakota statute, a federal court ruled that the state could not limit the commission of pharmacy managers because it would be contrary to federal law regarding Medicare Part D.

CVS Caremark faced a lawsuit last year for allegedly referring patients to its pharmacies and recharging patients for prescription drugs. The company won the case in June.