New York Attorney General Letitia James (D) on Thursday filed a lawsuit against CVS Health alleging that the company had violated antitrust laws and forced New York safety net hospitals to exclusively use a company that it owns when filling prescriptions through its pharmacies.
In her suit, James alleges that CVS is carrying out an "anticompetitive scheme" by forcing safety net hospitals within the federal 340B Drug Pricing Program to purchase administrative services through one of its subsidiaries, Wellpartner LLC.
CVS allegedly required these hospitals to purchase services through Wellpartner, a third-party administrator (TPA) that it owns, if they wished to process 340B-eligible prescriptions through CVS pharmacies. This requirement was purportedly put in place after the pharmacy chain purchased Wellpartner in 2017.
The 340B Drug Pricing Program was created in 1992 and allowed safety net hospitals to buy outpatient drugs at a discount from manufacturers. These hospitals largely serve vulnerable communities where patients may not otherwise be able to afford medications.
According to James, CVS forced these hospitals to use its administrative service provider and caused them to either "forgo substantial savings from the 340B program" or lose out on savings they could have gained from using another service, noting there were benefits of having a choice of service providers in a "fully competitive" market.
James said in her suit that the patients of New York were the "ultimate victims" of CVS's scheme.
"CVS’s actions undermine the aim of the 340B Program and hurt the financial condition of safety net healthcare providers," the suit claims. "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."
In a statement to The Hill, CVS said James's allegations were "without merit" and that it planned to "vigorously" defend itself against the claims.
"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," CVS said.
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