A class action lawsuit filed against CVS alleges that the popular pharmacy chain charges customers with health insurance more for certain generic drugs.
The complaint (PDF) filed by Megan Schultz in the U.S. District Court for the District of Rhode Island on August 7, seeking class action status to recover damages for all CVS customers who have allegedly been overcharged for certain medications.
According to the lawsuit, Schultz bought a generic drug from CVS in July using her insurance, and was charged $165.68. However, she discovered that if she had paid cash for the medication, she would have only had to pay $92 according to CVS’s pricing scheme.
“CVS never told her that paying in cash would allow her to pay 45% less for the drug; instead, CVS remained silent and took her money — knowing full well that no reasonable consumer would make such a choice,” the lawsuit states.
The lawsuit indicates that CVS is engaging in a fraudulent scheme involving several large Pharmacy Benefit Managers (PBMs), which negotiate prices insurance companies have to pay pharmacies. Pharmacies benefit by having enrollees in those insurance plans come to their stores to purchase medications, knowing they will be covered.
According to the complaint, the agreements are secret and result in the customer paying whatever amount the PBM and the pharmacy agree to, even it if is more than the actual price of the drug.
“Although the customers are told, for example, that they are required to pay $15 in a ‘co-pay’ for the drug, in reality this is not a ‘co-pay’ at all because CVS is sending a significant portion of the $15 back to the PBMs,” Schultz’s lawsuit indicates. “The PBMs, far from assisting with the payments, are taking an extra chunk out of the customer’s copayment.”
CVS owns CVS Caremark, one of the three largest PBMs in the U.S. The three PBMs set pricing for about 75% of the prescription drug market, the lawsuit claims.
CVS officials deny the claims in the lawsuit, saying that the copays are determined by the patient’s prescription coverage plan and not by CVS or the PBM, and that customers are not being overcharged.
The lawsuit claims that nearly 200 generic drugs are affected by the pricing scheme, including commonly prescribed drugs such as penicillin, Viagra, Atorvastatin, Albuterol, Depo-Testosterone, Januvia, and ibuprofen.
The CVS class action lawsuit claims that the pharmacy violated the Racketeer Influenced and Corrupt Organizations (RICO) Act, and claims of fiduciary conflicts of interest, lack of adequate care, violations of California consumer protection laws, and fraudulent concealment.