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Pharmacies Allegedly Overcharging for Commonly Prescribed Drugs
Image Courtesy of CVS.com

California customers sued CVS Health Corp, the largest pharmacy chain, and Walgreens Boots Alliance Inc., number two, for charging co-payments for certain commonly prescribed drugs exceeding the cost of the medication if paid for in cash  Stores had allegedly overbilled consumers who used their insurance providers for generic drugs, hiding the fact that paying cash was cheaper.

Customer Megan Schultz showed in court documents that she paid $165.68 for a generic drug that would have cost her $92 without insurance.  Her lawsuit alleges that benefit managers dictate which pharmacies are “in-network” and CVS pharmacies offer the managers a cut of the drugs to maintain in-network sales.    

Schultz believes CVS gave kickbacks to the pharmacy benefit managers, including Express Scripts Holding Co. and CVS Caremark.“CVS, motivated by profit, deliberately entered into these contracts, dedicating itself to the secret scheme that kept customers in the dark about the true price’’ of drugs purchased, Schultz’s attorneys claim in the suit, which is seeking group status.  The claim continues, “These agreements with [benefits managers] are based on secret, undisclosed contracts, under which CVS agrees to specific amounts it will charge and collect from insured customers — but the customers can neither see nor learn about these agreements or their terms from the pharmacies, the insurance companies, or anyone else. The linchpin of the scheme is that the customer pays the amount negotiated between the [benefits manager] and CVS even if that amount exceeds the price of the drug without insurance.”

Pharmacies Allegedly Overcharging for Commonly Prescribed Drugs
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CVS representatives rejected her claims, saying that co-pays on commonly presccribed drugs are actually set by the benefit managers.  “The allegations against us made in this proposed class-action suit are built on a false premise and are completely without merit,’’ Michael DeAngelis, spokesperson for the company, said.  In a statement issued, representatives go on to say, “Co-pays for prescription medications are determined by a patient’s prescription coverage plan, not by the pharmacy. Pharmacies collect the co-pays that are set by the coverage plans. Our pharmacists work hard to help patients obtain the lowest out-of-pocket cost available for their prescriptions. Also, our [benefits manager] CVS Caremark does not engage in the practice of co-pay clawbacks. CVS has not overcharged patients for prescription co-pays, and we will vigorously defend against these baseless allegations.”

Customer David Grabstald has made a similar claim against Walgreens, stating he paid $21.80 for a drug that would have only cost $10.  Walgreens spokesman Philip Caruso wouldn’t comment on this claim.  The lawsuits follow at least sixteen other cases around the U.S., all alleging benefit managers duped customers.  Cases have been filed specifically against UnitedHealth Group Inc., which runs the benefits manager OptumRx; Cigna Corp., which contracts with OptumRx; and Humana Inc.  The plaintiffs claim that the agreements with benefit managers violate federal racketeering and insurance laws.  

“No informed consumer would pay with insurance if proper disclosure had been made that he or she could pay far less with cash,” Attorney Steve Berman, who is representing both Schultz and Grabstald, said.  Some of the more commonly purchased drugs listed in the suit are Tamiflu, amoxicillin, and Viagra.  

Sources:

A startling lawsuit against CVS could blow up what you thought you knew about drug prices

CVS Health Is Sued Over ‘Clawbacks’ of Prescription Drug Co-Pays

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