The Oklahoma Insurance Department has entered into a settlement agreement with CVS Caremark over transaction fees the pharmacy benefit manager charges pharmacists to process Medicare Part D and group health plan claims, the agency announced Thursday.
The CVS Health subsidiary will pay $4.8 million to settle the alleged violations of the state’s Patient’s Right to Pharmacy Choice Act. CVS Caremark will pay $2.3 million in restitution to drugstores and $2.5 million in penalties to the state.
“CVS Caremark was cooperative during our investigation, we were able to work together through negotiations to ensure there is a level playing field that is abiding by the rules of [Patient’s Right to Pharmacy Choice Act] and other PBM statutes,” Oklahoma Insurance Commissioner Glen Mulready (R) said in a news release. “With the rising cost of healthcare throughout the pandemic, it is more important than ever to ensure companies fully comply with our laws to protect consumers and other businesses.”
CVS Caremark didn’t respond to requests for comment.
The Oklahoma statute underpinning the CVS Caremark settlement, however, is the subject of a federal legal dispute. The Pharmaceutical Care Management Association, a PBM industry group, filed a lawsuit arguing the federal the Employee Retirement Income Security Act, which governs workplace benefit programs, preempts the state law. If the plaintiff were to prevail, CVS Caremark would not have to pay Oklahoma or the pharmacies. CVS Health is a PCMA member.
A federal appeals court ruled in November that North Dakota’s law imposing requirements on pharmacy benefit managers comports with ERISA, potentially setting a precedent for similar lawsuits. North Dakota bans companies such as CVS Caremark from owning stakes in patient assistance programs or mail-order specialty pharmacies.
While it upheld the North Dakota statute, the federal court ruled the state could not limit pharmacy benefit manager fees because that conflicts with federal law related to Medicare Part D.
CVS Caremark faced legal action last year for allegedly steering patients towards its pharmacies and overcharging patients for prescription drugs. The company won that case in June.