Rite Aid says CVS Caremark clawed back $500 million, pushing pharmacies toward closure and sale.
Rite Aid – the national pharmacy chain in the middle of its second bankruptcy filing in two years – has filed a lawsuit against CVS Caremark, claiming that the pharmacy benefit manager fleeced it for $500 million with a “predatory” contract “scheme.”
The lawsuit lays bare the latest example of how CVS Caremark and pharmacy benefit managers in the health care chain have bullied their way into some of America’s richest companies.
CVS Caremark’s “predatory” process, as Rite Aid’s attorneys called it, is simple. Consolidate the market, push out competitors and raise prescription drug costs across the board.
Here’s how it worked, according to lawyers representing Rite Aid: CVS Caremark would bill Rite Aid pharmacies retroactively for prescriptions that had already been filled and paid for by customers. The clawbacks in total were in the range of $500 million, according to Rite Aid.
CVS Caremark demanded those clawback payments in its contracts or else Rite Aid would not be allowed to fill prescriptions for CVS customers and its Medicare patients. CVS Health also provides services for Medicare.
CVS Caremark is owned by its parent company, CVS Health which also owns health insurer Aetna
So you can see how this works. If Rite Aid wanted access to patients with Aetna health care plans and on Medicare it had to play ball.
Even more alarming for Rite Aid is CVS Health also operates more than 9,000 CVS retail pharmacies across the country and is a direct competitor with Rite Aid.
“CVS Caremark’s contracting practices have devastated (Rite Aid),” according to the lawsuit.
Rite Aid argues in its legal complaint that its pharmacies began struggling in the last few years because of these clawbacks. CVS would then offer to buy those struggling pharmacies and either shut them down or turn them into CVS pharmacies, according to the lawsuit.
Lawyers for Rite Aid said the company has sold or closed roughly 1,100 stores in the last three years.
Rite Aid said in court filings the reason for the selloff “was the ever-decreasing margins on prescription drugs – margins that are controlled in part by CVS Caremark, a division of Rite Aid’s largest competitor.”
SOURCE: Lawsuit: CVS Health Looted Rite Aid Pharmacies, Stripped Them for Parts
