The Louisiana attorney general announced Tuesday that her office will be taking “major legal action” against CVS after the company sent a mass text message to residents advocating against a bill under consideration during the legislative session.
Louisiana is filing three separate lawsuits against CVS.
The first lawsuit will seek legal action over the text messages sent to CVS customers in Louisiana.
Murrill’s office said CVS improperly used contact information for prescription and health notifications to incite fear and lobby against pending legislation.
The second lawsuit involves what Murrill describes as PBM abuse.
Murill’s lawsuit accuses CVS of abusing its power as a PBM by controlling multiple stages of healthcare and pharmaceuticals.
AG Murrill issued a statement after filing three lawsuits against CVS:
“CVS threatened to close 100 pharmacies when its unfair and deceptive business practices were recently challenged. The fact is – CVS and others engaged in similar conduct have already closed 100 Louisiana pharmacies – they are the ones owned and operated by independent pharmacists across the State. It’s time for PBMs to account for this harmful conduct and its effects in our State and on its people.”
The lawsuit states:
“CVS Caremark controls multiple, interlocking stages of the pharmaceutical supply and reimbursement chain—from insurance to drug pricing, to pharmacy distribution and dispensing. This structure gives it market power not just horizontally (as one of the largest PBMs), but vertically across multiple tiers of the healthcare system. For Example:
- CVS Caremark acquired Aetna in 2018—one of the largest health insurers in the United States. Through Aetna, CVS designs and manages plans that use Caremark as the PBM and CVS as the pharmacy. Aetna operates in Louisiana across multiple plan types, including: Medicaid, Medicare, individual and small business
- CVS operates MinuteClinics, HealthHUBs, and home infusion services, and provides chronic care and medication adherence programs (run through the PBM and pharmacy), and therefore has vertical control over diagnosis, prescription, and fulfillment.
“In addition, CVS’s rebate system causes drugs to cost more than they would in a properly functioning competitive market. In a competitive market, price competition should drive lower prices over time, especially when generic or biosimilar alternatives are available. Through the use of a foreign group purchasing organization, CVS can even obscure actual net drug costs and enable double dipping of rebates and administration fees.”
The third lawsuit claims that independent pharmacies in Louisiana are harmed by PBMs due to its “enormous market power.”
The lawsuit accuses CVS of having unfair competition and unfair trade practices.
At the time the texts were sent, Murrill issued a cease and desist letter to CVS regarding the urgent messages.
Many Louisiana residents received alarming text messages from CVS pharmacy providers ahead of the end of the legislative session. The texts urgently ask residents to contact their lawmakers, claiming a bill in the session threatens their access to pharmacies and medications.
The letter alleges CVS violated state law and threatens “legal action to protect the personal information of its citizens.”
CVS sent a message to customers warning that “last minute legislation in Louisiana threatens to close your CVS pharmacy. Your medication cost may go up and your pharmacist may lose their job,” urging customers to express their concerns.
House Bill 358 in Louisiana, which seeks to allow licensed pharmacists to dispense medication outside of traditional pharmacy settings, is facing backlash due to a provision affecting pharmacy ownership.
The bill would prohibit pharmacy benefit managers, also known as PBMs, from owning and operating pharmacies in the state. CVS is considered a PBM.
A PBM is considered a “go-between” between pharmacies and wholesalers, negotiating drug prices as well as which medications an insurer will cover.
The bill aimed to help protect locally owned pharmacies as well as residents’ prescription drug savings.
CVS argues that this move would force pharmacies across the state to close, possibly leaving people without their medications.
The main issue with the bill, which did not pass before the session ended, is not the free roaming of pharmacists, but a new provision stating that pharmacies will not be granted permits if they are fully or partially owned by a pharmacy benefit manager or subsidiary.
This could impact drug markup percentages.
Landry supports the lawsuits, voicing his dedication to holding PBMs account.
““For too long, big drug middlemen called PBMS, have inflated drug prices and taken advantage of Louisianans. I’m proud to stand with Attorney General Liz Murrill in holding them accountable. This month, CVS went too far by sending a politically charged and unethical message to its customers, and we won’t let that go unanswered. In Louisiana, we refuse to be intimidated by the fear tactics of these middlemen. Our focus remains on lowering drug prices and ensuring a fair, transparent pharmaceutical market,” said Landry.
It remains unclear who would be authorized to dispense medications under the new rules.
This lawsuit announcement comes as two other firms filed a class action lawsuit.
Boyer, Hebert, & Angelle LLC, along with Broussard, David & Moroux, filed the class action lawsuit against CVS Caremark.
The firms are asking anyone who received the text message or email to keep their messages and are encouraging residents to fill out a form to join the class action lawsuit.
CVS issued the following statement regarding the class-action lawsuit:
“Louisiana’s HB 358 came together Wednesday with no public hearing. We believe we had a responsibility to inform our customers of misguided legislation that sought to shutter their trusted pharmacy, and we acted accordingly. Our communication with our customers, patients and members of our community was consistent with law.
“Our focus remains on serving the people of Louisiana: lowering drug costs, providing access to care, and helping improve health. We look forward to working productively with policymakers to continue to make prescription drugs more affordable and accessible and to promote the value of community pharmacy.”
WDSU reached out to CVS about Murrill’s lawsuit and received this response:
Regarding our communication to Louisiana customers:
- Our communication with CVS customers, patients and members of the community was consistent with the law.
- To be clear, we did not use any Office of Group Benefits member information, and we agree with Governor Landry and Attorney General Murrill that OGB data should not be used for this type of outreach.
- We believe it was important for people to know about a potential disruption to where they get their medicine, whether that is at one of our 119 retail pharmacies in Louisiana, through home delivery, a long-term care pharmacy, or at a specialty pharmacy.
- Our customers were clear: they want access to CVS Pharmacy, and our colleagues were clear: they want to serve their friends, families, and neighbors in Louisiana.
- Our focus is and remains serving the people of Louisiana: lowering drug costs, providing access to care, and helping improve health. We look forward to working productively with policymakers to continue to make prescription drugs more affordable and accessible and to promote the value of community pharmacy.
Regarding the suit about “clawbacks:”
- We believe the claims are without merit and will defend ourselves vigorously
Regarding our integrated model:
- Our integrated model delivers value to members, patients, customers, and clients by providing better access, affordability, and advocacy for those we serve.
- By combining health care delivery, pharmacy, health care benefits, and pharmacy benefit management, we make it easier for people to have what they want the most: a connected care experience.
Other important items to note:
- CVS Caremark successfully won a competitive OGB PBM RFP with a perfect score and 5% better than the 2nd placed bidder.
- The Louisiana Independent Pharmacy Association has negotiated a +$9 dispensing fee, an increase in their reimbursement rate, resulting in incremental costs to taxpayers.
- CVS Pharmacy continues to be the lowest cost retail pharmacy in the state contract with an average reimbursement rate $141/Rx vs Independents of $149/Rx.
- Removing CVS Pharmacy from Louisiana will increase cost to the state by more than $4.6 million.
- Our pharmacists, pharmacy technicians and front store teams live and work in Louisiana; they too are an important part of their communities and are focused on caring for the nearly 1M patients and customers they serve.
- Our group purchasing organization (GPO) is based in the United States. It is NOT foreign based.
- The lawsuit provides the state’s view on a “properly functioning competitive market,” however, such a market would not and should not mandate pharmacy higher reimbursement rates to less efficient pharmacies. The result would be an increase in the number of more expensive independent pharmacies and higher costs for consumers. Importantly, CVS Pharmacy remains the lowest cost pharmacy and a critical partner in lowering prescription drug costs for Louisianans.
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