New York State Attorney General Letitia James today sued CVS Health for allegedly forcing the state’s 340B covered entities to use CVS’s 340B third party administrator Wellpartner as a condition for letting the entities contract with CVS retail and specialty pharmacies to dispense 340B-purchased drugs.
“These allegations are without merit, and we will defend ourselves vigorously,” a CVS Health spokesperson said early this afternoon.
In 2019, CVS reached a settlement with 340B TPA Sentry Data Systems, which sued CVS in federal district court in Florida alleging violations of state and federal antitrust laws.
In 2020, CVS settled a similar antitrust suit filed in federal district court in Florida by 340B TPA RxStrategies.
James filed the suit July 28 in state trial court (which in New York is called Supreme Court) in Manhattan.
The suit says that since 2017 when CVS acquired Wellpartner, CVS has told entities, “if they want to realize 340B savings from patient prescriptions filled at CVS pharmacies and CVS specialty pharmacies, they have to use Wellpartner as their TPA. They cannot choose another TPA.”
“This constitutes an illegal tie prohibited by the Donnelly Act,” New York state’s antitrust law that mirrors federal antitrust law, the suit says.
“By requiring covered entities to use its wholly-owned TPA, CVS effectively forces covered entities to either forgo substantial savings from the 340B program (i.e., not collect any savings at all for patients who fill their 340B eligible prescriptions at a CVS pharmacy) or forgo utilization of another TPA that might offer better pricing, quality, or service to the covered entity, or with which it already has a business relationship,” the suit says. “Some covered entities incur or have incurred substantial costs to transition and train personnel for Wellpartner services that were otherwise unwanted, and some covered entities bite the bullet and pay for two different 340B TPA providers—i.e., the one that they really want, and then also the one that is forced on them (Wellpartner) by the tying arrangement.”
“Covered Entities had to use Wellpartner, or their 340B benefit would go up in smoke for patients that go to CVS,” the suit says.
“CVS’s actions undermine the aim of the 340B program and hurt the financial condition of safety net healthcare providers,” the suit says. “With its illegal tie, CVS has harmed the competitive process and has caused substantial harm to the market for the provision of TPA services in New York, foreclosing the ability of other TPA providers to compete on the merits.”
“New York patients are the ultimate victims of CVS’s scheme,” the suit says. When CVS siphons off 340B program money from the very hospitals and health care providers for which the program is intended, it deprives safety net hospitals and health care providers of funds that could be used to improve quality and access to health care for the neediest New Yorkers—including New Yorkers without health insurance or an ability to pay for health care.”
The state’s primary association, Community Health Care Association of New York State (CHCANYS), welcomed state Attorney General James’ action.
“340B dollars allow community health centers to provide care and services to patients they might not otherwise be able to offer,” CHCANYS President and CEO Rose Duhan said. “CHCANYS supports any action that helps protect the integrity and intention of the program, and we applaud the attorney general’s efforts.
Groups that represent New York’s 340B hospitals—Healthcare Association of New York State and Greater New York Hospital Association—did not immediately respond to requests for comment on the lawsuit.
CVS Health made the following statement:
“New York’s covered entities enjoy a highly competitive retail pharmacy marketplace when choosing 340B contract pharmacies. Our integrated 340B offering helps vulnerable populations by providing additional, convenient retail pharmacy locations dispensing discounted prescriptions to patients. In fact, CVS Health’s participation in the 340B program delivered approximately $2.2 billion in savings to 340B providers in 2021, and over $200 million in New York, more than doubling the savings offered to New York covered entities in 2017. Through our efforts, we’ve also expanded the number of available pharmacies that participate, creating greater access to New York patients being served including underserved populations. … We continue to be a partner to the State of New York in delivering a number of important healthcare solutions to the people of New York, as recently demonstrated by our sustained, robust efforts to ensure access to COVID testing and vaccinations across the state.”
