Arkansas AG investigating CVS Caremark over drug reimbursements to local pharmacies

LITTLE ROCK (KATV) — Amid mounting complaints from Arkansas pharmacists, Arkansas Attorney General Leslie Rutledge has announced she is launching an investigation into pharmacy benefit managers - namely CVS Caremark - over accusations of plummeting prescription drug reimbursement rates being paid to local pharmacies.

In an interview with KATV, Rutledge said her office has begun to request documents from CVS Caremark and other pharmacy benefit managers - or PBM's - to evaluate whether they've been in violation of the state's Deceptive Trade Practices Act.

Many Arkansas pharmacists claim they began to see their drug reimbursement rates begin to drop off at the beginning of the year, despite insurance companies being charged the same amount by their PBM's.

"Essentially they're losing money and they've gotten to the point where they have to decide whether to lose money or take care of their customers that they've been caring for, for years and decades," said Rutledge.

The ongoing issue brought several hundred pharmacists to the state capitol last week, urging lawmakers to take action against PBM's. Pharmacists are claiming that a lack of regulation over pharmacy benefit managers allows those companies to create a price spread in their favor, which they claim is illegal when dealing with taxpayer subsidized Medicaid expansion insurance plans.

"CVS Caremark in particular, doesn't just adjudicate claims for Arkansas Works patients, they set the price to the pharmacies and they set a different price to the insurance company, and it's not disclosed," said Scott Pace, CEO of the Arkansas Pharmacists Association. "And what is so nefarious at the pharmacy level is that they compete with the pharmacies whose price their setting."

It appears the pharmacy side of CVS Health is taking advantage of the reimbursement rate situation by offering to buy out failing independent pharmacies. Pace showed KATV a letter that several pharmacists across Arkansas have reportedly received, acknowledging declining reimbursement rates while propositioning pharmacists to sell their store to CVS Pharmacy.

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In a statement released to KATV, a CVS Health spokesperson said:

"CVS Caremark is focused on providing our pharmacy benefit management clients with opportunities to improve health outcomes for their members, while also managing costs, and is committed to providing our PBM clients and their members with a broad network of pharmacies that includes local, independent pharmacies. We reimburse our participating network pharmacies, including the many independent pharmacies that are valued participants in our network, at competitive rates that balance the need to fairly compensate pharmacies while providing a cost-effective benefit for our clients. We also have a well-established appeals process for network pharmacies regarding reimbursement, and our responses to those appeals comply with all applicable laws."