The Oklahoma Insurance Department (“OID”) recently agreed to a $4.8 million settlement with major pharmacy benefit manager (“PBM”), CVS Caremark, for violations of the state’s Patient’s Right to Pharmacy Choice Act (“the Act”). CVS Caremark violated the Act by improperly collecting transaction fees from pharmacies for Medicare Part D and ERISA plan claims. Under the terms of the settlement agreement, Oklahoma independent pharmacies are set to receive $2.3 million from the settlement while the remaining $2.5 million will be assessed against CVS Caremark as a penalty.
However, there is a critical condition before the settlement can be finalized. Pharmaceutical Care Management Association (“PCMA”), a powerful lobbying group that lobbies solely on behalf of PBMs, previously challenged the Act in September 2020 alleging that certain provisions of the Act are unenforceable because they are preempted by federal law. A federal judge previously ruled that the OID is permitted to enforce the Act while the case is pending in the Western District of Oklahoma. Therefore, the settlement between the OID and CVS Caremark is contingent on the outcome of this case. If it is determined that the Act is not preempted by federal law, it appears that the settlement will be enforced promptly. While PCMA’s legal challenge may slow the settlement from ultimately taking effect, Oklahoma pharmacies have a reason to be optimistic due to the unanimous decision of the Supreme Court of the United States in Rutledge v. PCMA which held that Arkansas’ Act 900, which also addresses PBM reimbursement, was not preempted by ERISA.
OID’s Director of PBM Compliance and Enforcement Kelli Price stated, “[w]hile questions remain about the extent to which enforcement of the Patient’s Right to Pharmacy Choice Act may ultimately be preempted by federal law, we must not stand idle while fees charged in violation of the law are being paid by Oklahoma businesses and consumers.” As previously discussed by Frier Levitt, the Act regulates PBMs and contains numerous provisions that:
(1) protect patient access and choice of pharmacy,
(2) increase transparency, and
(3) rein in anti-competitive practices between PBMs and independent pharmacies.
Frier Levitt continues to track and monitor this settlement, the evolving legal challenge, and the implications for independent pharmacies in Oklahoma and throughout the United States.
How Frier Levitt Can Help
Frier Levitt represents numerous pharmacies across the United States in challenging PBM audits, network access, reimbursement practices and has extensive knowledge on all aspects of the pharmacy-PBM relationship. Contact us today to speak with an attorney about how your pharmacy can leverage the various laws and protections afforded to pharmacies, including Oklahoma’s current PBM laws in addition to federal laws which regulate PBM conduct.
