Lonoke pharmacy sues PBMs

A Lonoke pharmacy has filed suit in circuit court against pharmacy benefit managers, claiming they are violating Arkansas law by withholding information to pharmacies and reimbursing their own pharmacies more than they reimburse independent ones.

The suit says Lackie Drug Store has been forced to routinely sell prescriptions to consumers at a loss and alleges that the plaintiff is entitled to its actual financial losses and reasonable attorneys’ fees. It seeks a “disgorgement,” or a return to itself of profits gained from wrongful activities.

It also seeks civil penalties of $10,000 per violation, along with injunctions to end actions in violation of Arkansas law.

Lackie Drug Store filed the suit in the Lonoke County Circuit Court Nov. 13 against Arkansas CVS Pharmacy, CVS Health, other pharmacy benefit managers (PBMs) and the PBMs’ association, the Pharmaceutical Care Management Association (PCMA).

The complaint seeks a jury trial. It is represented by Poynter Tucker, a Little Rock-based law firm. Attorney Clarke Tucker, who recently was elected a state senator, said the plaintiffs don’t have a particular dollar amount they are seeking.

PBMs serve as middlemen between pharmacies and insurance companies, reimbursing pharmacies for the drugs they buy wholesale through a methodology based on “maximum allowable cost.” Their stated purpose is to incentivize pharmacies to reduce costs. But pharmacies say that some reimbursements fall below their wholesale cost of the drug, and they accuse PBMs of unequal reimbursements. The largest PBM, CVS Caremark, is owned by the same company that owns CVS Pharmacy.

The 17-page complaint accuses PBMs of failing to abide by an Arkansas law requiring pharmacies to know reimbursement rates before filling prescriptions, and for PBMs to update their lists so pharmacies know current pricing. It says the process forces Lackie Drug Store to fill prescriptions without knowing what the reimbursement will be, and then to accept whatever money it receives.

And it says PBMs are doing this deliberately, with bigger profit spreads for pharmacies like Lackie and narrower profit margins for their own affiliates. It called Arkansas CVS Pharmacy an “active co-conspirator” acting in violation of the Arkansas Deceptive Trade Practice Act. Under Arkansas law, PBMs are required to reimburse other pharmacies the same amount they reimburse their affiliates.

“The Defendant PBMs and the Defendant PBM Affiliates are knowledgeable and, in fact, intend for Lackie Drug to lose substantial sums of money in this blind reimbursement process in order to remove Lackie Drug, and other Arkansas’ (sic) independent pharmacies like it and that compete against Arkansas CVS Pharmacy and other PBM Affiliates, from the marketplace or force them to sell their business to a big brand PBM Affiliate’s pharmacy controlled, operated, and preferred by a PBM,” the complaint says.

The complaint says the defendants’ actions are “intentionally designed to prevent honest competition and perpetuate monopolies by the owners of big brand stores, which control the PBMs and are treated much more favorably by the PBMs.”

A PCMA spokesperson said the association does not have a comment at this time.

The news comes a week after the U.S. Supreme Court unanimously ruled in favor of the state in Rutledge v. Pharmaceutical Care Management Association. That case centered around Act 900, which was passed in Arkansas in 2015. The Arkansas law requires PBMs to increase reimbursements for generic drugs if they are below wholesale costs, and it created an appeals process for pharmacies to challenge the reimbursements.

When the law went into effect in September 2015, the PCMA immediately sued. The industry argued that state laws can’t preempt payments made for voluntarily created employee benefit plans in private industry under the Employee Retirement Income Security Act of 1974, otherwise known as ERISA.