Attorneys met with members at the 2023 NCPA Annual Convention yesterday to explain the ins and outs of a class action lawsuit filed against vertically consolidated CVS Health, Caremark, and Aetna in September, which aims to recoup for independent pharmacies millions of dollars in DIR fees. For several hours, they held open office hours along the main concourse of the Orange County Convention Center, where a steady stream of members came through for more information.
"I want to learn more about the methodology for giving my members a sense for how to get into, and learn more about, what is going on with this class action suit," said David Mayper, executive director of Pharmacy Owners Alliance. "I understand this is going to be a long-term slog, but it should have some opportunities to improve reimbursement for independent pharmacy."
The suit claims that wrongful back-end penalties for Medicare Part D prescriptions have been assessed in violation of federal antitrust laws and state laws governing contracts. The lawsuit also challenges Caremark's agreements to arbitrate claims as being unfair and unenforceable.
"I'm here to support our members. I want to help find solutions to help members be successful with whatever comes, and as we go forward," Cathy Hanna, VP of professional affairs at American Pharmacy Services Corporation. "I'm here for more background and to glean what I can so I may be a source of information for my members."
The groundwork for the lawsuit has been several years in the making and is defined by a few specific events. In 2021, an arbitrator awarded a judgment of $23 million to the AIDS Healthcare Foundation, finding that Caremark breached the covenant of good faith and fair dealing in implementing its DIR practices. A district court in Arizona confirmed the award in 2022.
In 2022, an arbitrator awarded a judgment of $2.1 million in wrongfully collected fees, plus an additional $1.5 million in attorneys and interest, because Caremark's contract was unconscionable. A district court confirmed the award in 2023. Despite these two awards, Caremark has done nothing to change its ways, other than to modify its dispute resolution processes to make it more expensive and more difficult for pharmacies to bring claims against them.
"These are only a few arbitrations that we know about," said NCPA CEO Douglas Hoey. "The arbitration process keeps these cases secret. That allows Caremark and the other PBMs to continue to treat pharmacies unfairly and illegally extract junk fees. We are hoping this lawsuit helps to bring these unlawful practices into public view."
Members who attended the convention briefings with Berger Montague and Cohen & Gresser attorneys agree.
Mary Giamartino is a pharmacist from Newfane, Vt., who sold the pharmacy she owned for 41 years in January. The Hotel Pharmacy, Inc., was located in a Methodist church in Brattleboro, Vt., originally built in the 1880s and restored by Giamartino and her late husband. Even though she's no longer an owner, she's committed to improving the playing field for pharmacists.
"I want to help anyone else I can. If I can, I'll do it, and that's why I'm here," she said. "These fees have been going on for years and getting worse and worse—exponentially worse. I think these attorneys have something, and they've done their homework."DIR fees have risen by more than 107,400 percent in recent years, a trend that is driving many community pharmacies to the brink of insolvency. It's common for individual pharmacies to pay hundreds of thousands of dollars each year in fees long after the point of sale, calculated off opaque metrics.
Theresa Tolle, owner at Bay Street Pharmacy in Sebastian, Fla., and past president of the APhA (and longtime NCPA member, she points out,says she came to the question-and-answer session because she wanted to learn more about the process "I was inspired by the other owners in the meeting who were asking great questions about strategy and we were able to brainstorm."
Tolle was joined by her resident at Bay Street Pharmacy, Gabby Perez, who said she was eager to attend to find out more about why DIR fees are so impactful on the bottom line for independent pharmacies. "I'm learning a lot and I'm discouraged by DIR fees, of course," she said. "But I'm also hopeful that there are people out there who are trying to do the right thing, take action, and do right by independent pharmacies."
