A New York State judge has dismissed the state’s antitrust lawsuit alleging that CVS Health illegally makes 340B covered entities use its 340B third party administrator Wellpartner in order to contract with CVS retail and specialty pharmacies to dispense 340B-purchased drugs.
Judge Robert Reed issued his opinion on Tuesday. He said CVS broke no state antitrust laws because covered entities “typically work with multiple contract pharmacies” and the state “does not allege that CVS has done anything to prevent switching to competing pharmacies or to make switching costly.”
Reed noted that about 86 percent of New York covered entities that use contract pharmacies do not contract “with a single CVS pharmacy location” and that 71 percent of New York covered entities “did not contract with any of the major national chains.”
“In other words, CVS did not have the power to coerce covered entities to use Wellpartner’s administrative services as required for [an antitrust] claim, as any covered entity that wished not to use Wellpartner could join the 86 percent of New York covered entities that chose not to include CVS and their contract pharmacy network at all,” Reed said.
The state attorney general’s office is considering its options, a representative said. CVS Health did not immediately respond to a request for comment.
In 2019, CVS reached a settlement with 340B TPA Sentry Data Systems (now the Craneware Group), 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.
The state attorney general’s office sued CVS in July 2022.
The suit said 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 New York state’s antitrust law that mirrors federal antitrust law, the suit said. Reed rejected that theory. He dismissed the state’s suit without prejudice, giving it a chance to refile under a different theory.
