Louisiana Gov. Jeff Landry and Attorney General Liz Murrill announced Tuesday the state is filing three lawsuits against CVS and its affiliates alleging they engaged in “unfair, deceptive, and unlawful” trade practices.
Joined by dozens of independent pharmacists at the state Capitol, Landry and Murrill condemned the company for using customer information to launch a political text message campaign earlier this month. The messages called on recipients, including state employees, to oppose a bill in the Louisiana Legislature that would have prohibited pharmacies from also owning pharmacy benefit managers (PBMs), which operate as “middlemen” that oversee prescription drug programs for insurance companies and large employers. The bill failed to pass both chambers before the session ended.
Caremark, a CVS subsidiary, holds the PBM contract with the state Office of Group Benefits, which provides prescription coverage for most state employees and public school teachers.
Critics of PBMs argue they are responsible for high medication prices, and independent pharmacists allege they unfairly favor large corporate pharmacies such as CVS and Walgreens. Some of the nation’s largest pharmacy chains, including CVS, also operate a PBM.
In the final days of the legislative session, which ended earlier this month, CVS sent texts to customers saying the legislation would cause them to close all of their pharmacy locations in Louisiana. First Lady Sharon Landry was among the recipients, the governor shared Tuesday, as was Murrill.
The governor directed Murrill to investigate the text messages, which led to the lawsuits, she said. All three were filed in St. Landry Parish.
“They used our information to lobby for their own corporate interests and to scare people into lobbying on their behalf,” Murrill said. “At least one or two of those text messages that I saw … threatened seniors, veterans and people with serious healthcare conditions, and said that you might not be able to get your medication, or if you do, you may have to pay more.”
“All of those things are deceptive, in my opinion, and certainly misleading,” Murrill added.
In an emailed statement, CVS spokeswoman Amy Thibault said the text messages were legal. The company denies using information obtained from state employees from the Office of Group Benefits.
The first of Murrill’s lawsuits directly addresses the text messages, which she alleges was an improper use of customer data as well as a violation of “established standards of decency.”
The second lawsuit targets the CVS “vertical integration” model, in which one company controls multiple stages of the supply chain.
“Just like Congress prohibited all companies from owning the gas pump, we should ban PBMs from monopolizing so that they own the drug counter,” Landry said. “When you let middlemen control everything, it’s not a free market. It’s a rigged market.”
“By combining health care delivery, pharmacy, health care benefits, and pharmacy benefit management, we make it easier for people to have what they want the most: a connected care experience,” Thibault said in the CVS statement.
The third lawsuit alleges CVS’s business practices violate Louisiana’s Unfair Trade Practices and Consumer Protection Law, harming the state’s independent pharmacies.
In a news release, Murrill alleged CVS uses its industry influence to impose “unethical and exceedingly high fees” on independent pharmacies under threat of being expelled from the CVS network.
“CVS is abusing its enormous market power to engage in covert spread pricing to further enrich itself at the expense of the independent pharmacies in its network,” Murrill wrote in her news release.
Critics have accused PBMs of spread pricing, when health plan providers or large employers are charged higher prices for prescription drugs than what the PBMs pay the pharmacy that fills the order. PBMs then keep the “spread” as profit.
PBMs insist spread pricing places the risk on their business when pharmacies raise their prices to fill prescriptions, forcing the PMBs to eat any costs. When there is a spread, PBMs say it goes toward their administrative expenses. The goal is to encourage consistent pricing for coverage plans and customers, according to PMBs.
While Landry previously promised to call the legislature back to Baton Rouge for a special session to address PBMs, he said Tuesday he will first explore the possibility of taking unilateral executive branch action.
Landry says he is convening a working group, that will include Murrill, to explore what options are available to him.
While legislation to prohibit pharmacies from owning PBMs failed, legislators did pass House Bill 264 by Rep. Mike Echols, R-Monroe, which requires PBMs to be more transparent with their practices with state regulators and pass on more savings to customers. Landry announced his intention to sign the legislation.