Six independent pharmacies in Texas have filed a federal law suit against CVS Caremark charging the drug retail giant and pharmacy benefits manager with violations of the Racketeer Influenced and Corrupt Organizations Act and trade secret misappropriation.
The complaint also alleges that CVS Caremark contracts requiring patients to buy maintenance medications only from CVS Caremark violate Texas' "Any Willing Provider" law.
"CVS Caremark traps patients and non-CVS retail pharmacies in a scheme to deny patient choice of pharmacy and to smother business competition," said Amanda Gohlke Fields, general counsel for plaintiffs American Pharmacies, a for-profit, member-owned pharmacy wholesale buying group.
CVS Caremark corporate spokeswoman Christine K. Cramer said the company is reviewing the suit. "CVS Caremark is confident that its business practices and service offerings, which are designed to reduce healthcare costs and expand consumer choice, are being conducted in compliance with applicable antitrust, privacy and other laws," Cramer said.
The suit claims CVS Caremark violates the firewall between the retail pharmacy and the pharmacy benefits manager divisions as required when the Federal Trade Commission approved the CVS and Caremark 2007 merger. Instead, the combined company built an information technology platform that straddles all of CVS Caremark's business segments, capturing in-depth patient data for marketing and other purposes in violation of HIPAA patient privacy laws, the suit alleges.
Patient information gathered from non-CVS pharmacies includes names, addresses, birth dates, medical diagnoses, prescription histories, and prescribing physicians. CVS Caremark mines the accumulated patient- and pharmacy-specific data to identify individual patient buying practices, their physicians' prescribing practices, and individual pharmacy business volume, the suit alleges.
American Pharmacies says patients report being forced, via higher copayments and refusal to cover maintenance medications, to leave their pharmacy where the patient and pharmacist have a professional and personal relationship. Other patients report moving to a CVS Caremark network pharmacy out of fear of losing all health insurance coverage, the suit alleges.
Woonsocket, RI-based CVS Caremark contacts patients via direct mail and phone calls about their prescriptions, urging, and in some cases mandating, plaintiffs' patients to use CVS Caremark retail or mail order stores. The patients' physicians also are targeted to change prescribing practices to include drugs from CVS Caremark-favored drug makers, the suit alleges.
"The defendants have an ambitious plan to take over 200 independent pharmacies per year," Fields said. "Taking trade secrets from their competitors' business records and excluding plaintiffs from CVS Caremark's pharmacy networks plays right into their plan. Knowing just how vulnerable a non-CVS pharmacy may be puts that pharmacy squarely in CVS Caremark's crosshairs."
The American Pharmacies plaintiffs want triple damages for the RICO violations, and an injunction barring CVS Caremark's practices in the future. The trade secret misappropriation claim includes a request for exemplary damages.
The Texas plaintiffs are:
- Rogers Pharmacy, Victoria;
- Brookshire Bros. Pharmacy of Kirbyville;
- Hometown Pharmacy, Fairfield;
- Hibbs Pharmacy, Bay City;
- Kinsey's Pharmacy, Tyler; and
- De La Rosa Pharmacy, Weslaco.
See also:
CVS Works on Patient Privacy Improvements Following Fine
CVS says it is subject of FTC investigation
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John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.