A newly unsealed whistleblower suit claims that multiple CVS Health subsidiaries coordinated to prevent members from accessing generic drugs in a bid to boost the bottom line.
The suit, first obtained by Stat, was filed by Alexandra Miller, who worked at CVS for nearly two decades before leaving the company three years ago. Miller says that when she reported the behavior to a superior, she was told that the company had decided the benefits of the alleged scheme outweighed the likelihood of being caught.
Miller claims that CVS' SilverScripts Part D subsidiary as well as its Caremark pharmacy benefit manager and retail pharmacies worked together to prevent access to generics, which allowed it to pocket higher rebates because members were pushed to buy branded medications rather than lower-cost options.
Members were also often kept in the dark about potential authorized generic medications or identical drugs that are produced by the same manufacturer but offered at a lower cost.
The company violated Medicare regulations by failing to disclose this formulary distinction and felt that SilverScripts Part D customers were less likely to complain about the potential costs because many receive subsidies to cover their medication expenses, according to the lawsuit.
The Department of Justice declined to join the suit. CVS told Stat said it intends to "vigorously defend" itself.
The lawsuit was made public as policymakers put the pharmacy supply chain, and pharmacy benefit managers in particular, under the microscope. The Federal Trade Commission said last week that it would dig into the business practices of six major PBMs, including Caremark, as the industry becomes increasingly consolidated.
The PBM market is dominated by three companies, all of which are also integrated with a major health plan and other industry segments: Caremark, a sister company to Aetna; Express Scripts, which is owned by Cigna; and OptumRx, which is a sister company to UnitedHealthcare.
A recent Supreme Court decision granted states greater power to regulate PBMs, and with that have come multiple investigations into their role in Medicaid, including millions in settlements paid out by Centene in six states.