OID Reaches $4.8M Settlement Agreement with CVS Caremark for Alleged Violations of the Patient’s Right to Pharmacy Choice Act, Dependent On Federal Court Decision

By: Value News | Category: Special Interest | Issue: January 2022

Provided by Oklahoma Insurance Department

On January 20, 2022, the Oklahoma Insurance Department (OID) announced that the Department entered into a Settlement Agreement with CVS Caremark regarding its collection of transaction fees from pharmacies for Medicare Part D and ERISA plan claims. Under the terms of the agreement, CVS Caremark, a Pharmacy Benefits Manager (PBM), will pay the state of Oklahoma a total of $4.8 million to settle the violations. This will include $2.3 million for Oklahoma pharmacies and an additional $2.5 million in penalties.

In September 2020, OID began an investigation into transaction fees charged by CVS Caremark to Oklahoma pharmacists and pharmacies, which OID believes violates the Patient’s Right to Pharmacy Choice Act. Whether Oklahoma law is preempted by the federal regulations governing Medicare and ERISA plans is currently pending before the U.S. District Court in the Western District of Oklahoma in Pharmaceutical Care Management Association (PCMA) v. Mulready. The distribution of restitution and penalties included in the Settlement Agreement is dependent upon the outcome of the PCMA v. Mulready litigation and whether or not the Court finds the Patient’s Right to Pharmacy Choice Act is preempted by federal law.

“We take our role of protecting Oklahoma consumers very seriously and are committed to enforcing the laws. CVS Caremark was cooperative during our investigation, we were able to work together through negotiations to ensure there is a level playing field that is abiding by the rules of PRPCA and other PBM statutes,” Oklahoma Insurance Commissioner Glen Mulready said. “With the rising cost of healthcare throughout the pandemic, it is more important than ever to ensure companies fully comply with our laws to protect consumers and other businesses.”

“While questions remain about the extent to which enforcement of the Patient’s Right to Pharmacy Choice Act may ultimately be preempted by federal law, we must not stand idle while fees charged in violation of the law are being paid by Oklahoma businesses and consumers,” OID’s Director of PBM Compliance and Enforcement Kelli Price said. “In this spirit and with respect for the purpose of the Act, the Department and CVS Caremark have worked together cooperatively to come up with a fair resolution.”

PBMs manage prescription drug benefits on behalf of health insurers, Medicare Part D drug plans, large employers and other payors. Typically, PBMs act as intermediaries between pharmacies filling prescriptions and prescription drug plans, often influencing what medications will be covered and the costs of those drugs for both consumers and pharmacies.

In recent years, PBMs have faced growing scrutiny and legislation across the U.S. To file a PBM complaint, visit https://www.oid.ok.gov/pbm-complaint-form/.

If you have questions about other insurance issues, please contact the Oklahoma Insurance Department at 1-800-522-0071 or visit our website at www.oid.ok.gov.  

Questions or comments should be directed to
Communications Director, Liz Heigle
eat1@eau1eav1eaw1 | (405) 819-2221

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Oklahoma Insurance Department

For more information, contact:

Oklahoma Insurance Department

(800) 522-0071
400 NE 50th Street | Oklahoma City, OK 73105

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