Okla. Insurance Dept. says CVS violating pharmacy choice law

CVS/Caremark, one of the nation’s largest pharmacy benefits managers, has again drawn scrutiny by insurance regulators for allegedly running afoul of state pharmacy choice laws.

The latest action by the Oklahoma Department Of Insurance says Caremark/CVS was steering customers to its own pharmacies for prescriptions in violation of a 2019 state law that allows customers to choose their pharmacy.

100 complaints filed on pharmacy choice

In a notice of hearing and order to show cause filed Tuesday, Oklahoma Insurance Commissioner Glen Mulready said his office has received more than 100 complaints alleging that CVS denied prescription claims submitted by Oklahoma pharmacies on behalf of customers and told they were required to have their prescriptions filled at CVS pharmacies.

“The denial of prescription claims…[is] believed to be connected to a program offered by Caremark/CVS to self-funded plans…which required member to refill long-term medications in 90-day supply increments and further required the delivery of those medications to be by mail through CVS’ mail-order pharmacy or filled at a retail CVS pharmacy location,” according to the order.

“I am convinced that CVS/Caremark does not want to follow Oklahoma law and wants to find every opportunity to skirt their responsibility.”Oklahoma Insurance Commissioner Glen Mulready

“I am convinced that CVS/Caremark does not want to follow Oklahoma law and wants to find every opportunity to skirt their responsibility,” Mulready said in a release announcing the intent to file an administrative order against the company. “I am extremely frustrated with the misinformation and confusion presented to Oklahoma consumers.”

The insurance commissioner in February put CVS on notice that it believed it was in violation of state law and CVS responded, it said, with corrective action. But Mulready said the company has since told its large client employers that filing 90-day prescriptions is now prohibited.

“CVS/Caremark has used untruthful and harmful statements to explain the reasoning behind this impactful business decision that continues to restrict pharmacy choice conditions,” the commissioner’s letter said.

Second violation cited

“This is especially egregious because this is the first time that any PBM previously sanctioned by the Department has publicly committed the same violation a second time,” he said.

In January of 2022, CVS agreed to pay $4.8 million to the state’s insurance department for alleged violations of the Patient’s Right to Pharmacy Choice Act.

“Commissioner Mulready’s allegations are without merit. The Oklahoma Insurance Department (OID) recently asserted authority over prescription benefits for certain multistate or national employers headquartered outside the state of Oklahoma and we discussed with the OID our concerns about the impact changing uniform benefit design could have on consumers who rely on 90-day prescriptions. Only Oklahoma consumers who are members of those out-of-state plans are impacted by these changes and we are ensuring that they are able to access their medications without interruption," according to CVS/Caremark, based in Woonsocket, Rhode Island.

This is hardly the first time the company has earned the attention from state regulators regarding alleged questionable business practices. It is engaged in numerous lawsuits over its controversial PBM practices. In April of last year, the Minnesota Department of Commerce initiated an enforcement action against CVS for nearly identical violations as those in Oklahoma and sought $1.25 million in fines.

Justice Department suit

The federal government has also been on CVS’ tail. In December 2019, CVS and its Omnicare business were sued by the Justice Department over alleged fraudulent billing of Medicare and other government programs for outdated prescriptions for disabled and elderly individuals. And in Sept. of 2014, CVS agreed to pay $6 million to settle US allegations that it knowingly failed to reimburse Medicaid for prescription drug costs.

A letter last month from Rep. James Comer, chairman of the Committee on Oversight and Accountability, asked CVS to provide documents and information to his committee related to the company’s formulary design and management, as well as pricing, discounts, and incentives of encouragement of a patient to use a pharmacy owned by CVS/Caremark.

“CVS Caremark appears to be continuing to leverage its size for financial gain,” Comer’s letter said. “PBMs engage in self-benefiting practices at multiple levels of payment and supply chain as they retain control over drug prices, rebates, pharmacy reimbursements, insurers, pharmacy networks, and formularies,”

Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].

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Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].