Six Blue Cross and Blue Shield insurers sued CVS Health on Wednesday, claiming the pharmacy overcharged them for generic drugs. The plaintiffs — which include Blues plans in Alabama, Florida, Minnesota, North Carolina, North Dakota and Kansas City — said CVS charged them a higher price for generic prescriptions than customers paid in cash.
Pharmacies are supposed to charge insurers the “usual and customary” price for generic medications, determined in a previous lawsuit against Kmart to be the standard cash price paid by customers. The Blues plans would pay the price negotiated by their pharmacy benefit managers for drugs, unless the usual and customary price is lower than that negotiated rate.
The plaintiffs alleged that CVS misrepresented the usual and customary rate for these drugs by offering a much lower price to customers that participated in its cash discount programs. The company began offering its Health Savings Pass program in 2008, which was later transitioned to its Value Prescription Savings Card program.
By paying a $15 membership fee, customers that paid in cash would have access to more than 400 generics at the price of $12 for a three-month supply. According to the complaint, CVS frequently offered the same cash price to customers who were not enrolled in one of these programs.
The prices that the Blues plans were charged for these same medications was “significantly higher” than the cash prices paid by customers, the plaintiffs said. For example, multiple Blues plans reported overpaying for Nadolol, a generic to treat high blood pressure. BCBS of North Carolina reported paying $257 for the drug, while cash-paying customers in the savings program paid $12, according to court documents.
“Third-party payors then reimbursed CVS based on those higher, inflated prices—instead of the actual, lower, prices CVS offered to the general public, including through its Cash Discount Programs,” the complaint stated.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
The Blues plans said this not only caused them to overpay for prescription claims, but it also prevented them from getting better drug prices for their members.
In an emailed statement, CVS Health denied the allegations, saying they were “completely without merit.”
“The CVS Pharmacy Health Savings Pass was a membership program intended for customers who either did not have insurance or chose not to use insurance. The Value Prescription Savings Card Program is a prescription drug card offered and administered by a third-party,” the company stated. “Generic drug prices available through these programs were not the usual and customary price charged by CVS Pharmacy, nor the price available to the general public. Neither of these programs were in any way concealed, nor fraudulent.”
The plaintiffs are seeking injunctive relief, damages, and an award of twice the amount they were overcharged.
Other pharmacy chains have recently faced similar lawsuits. In 2018, Rite Aid was hit with a class action lawsuit for allegedly charging insurers more than it charged customers under its cash membership plans. Walgreens faced a class action lawsuit for similar allegations that year.
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