Frier Levitt Obtains Arbitration Award Against Caremark Arising from Improper DIR Fees

PRESS RELEASE

NEW YORK, June 21, 2022 – Frier Levitt is pleased to announce a significant victory on behalf of HIV-focused specialty pharmacy, Mission Wellness, against Caremark and SilverScript that a federal court has refused to seal, resulting in the victory becoming public record through court filings. Pharmacy Benefit Managers (PBMs) often impose on pharmacies repressive “gag clauses” that prevent providers and law firms from revealing victories achieved against PBMs. Like many pharmacies around the country, Mission Wellness has been a passionate advocate for serving vulnerable patients and took appropriate steps to stand up to Caremark’s unreasonable DIR fees and reimbursement “underwater.” Frier Levitt obtained an arbitration award on behalf of the specialty pharmacy of over $3.6 Million. Frier Levitt prevailed on all counts, including breach of contract, with the Arbitrator ordering the return of 100% of the DIR fees recouped from Mission Wellness, plus attorneys’ fees and interest, as well as a stern caution about future DIR fee assessment. As of the date of this article, Caremark and SilverScript have not yet taken responsibility and paid Mission Wellness the awarded amount. Frier Levitt filed a petition to confirm the unpaid arbitration award in the United States District Court for the District of Arizona.

PBMs assess DIR fees against pharmacies participating in Medicare Part D networks. “DIR” stands for “Direct and Indirect Remuneration,” and describes any kind of remuneration Part D Plan Sponsors (PDPs) or their PBMs receive from any source after the point of sale that offsets the PDP’s costs. In many instances, PBMs unilaterally recoup DIR fees from providers months after the provider is initially paid by the PBM.

Mission Wellness is a minority and woman-owned San Francisco specialty pharmacy. Because of Caremark’s DIR fees, Mission Wellness was losing money while participating in Caremark’s Medicare Part D networks. Caremark and SilverScript have profited at the expense of Mission Wellness, HIV patients and Medicare. Only Mission Wellness’ sheer dedication to the HIV community motivated them to continue serving HIV patients at a loss. Mission Wellness is one of only a handful of specialty pharmacies located within walking distance of its San Francisco neighborhood. Had Mission Wellness dropped out of Caremark’s Medicare network, HIV patients would have suffered. Mission Wellness continued to care for Caremark’s Medicare patient population while facing financial ruin. The owner has a passion to care for this vulnerable patient population that Centers for Medicare & Medicaid Services (“CMS”) legally recognizes as one of only a few federally “protected classes” of patients. Medicare Part D is our governmental prescription drug program for those aged 65 or older, but HIV patients qualify for Medicare regardless of age. Caring for HIV patients is a matter of national significance, according to CMS and Mission Wellness. But, for Caremark, it is all about DIR fees.

Caremark refused to provide the required discovery throughout the arbitration, including discovery necessary to “audit” Caremark’s calculations of medication adherence, which serves as the basis for its recoupment of DIR fees.  Even after being sanctioned by the Arbitrator, Caremark refused to provide the basis for the DIR methodology.

The victory against Caremark and SilverScript provides hope to independent pharmacies that wish to challenge PBM DIR fees. The victory arrives almost simultaneously with last week’s announcement that the FTC is currently investigating the practices of Caremark and other PBMs, as it relates to their improper recoupment of DIR fees from independent pharmacies. According to trial counsel, Co-Founding Partner Jonathan E. Levitt, Esq., “performance-based DIR fees are a threat to the existence of independent pharmacies and the deleterious impact of DIR fees is felt by patients, Medicare, drug manufacturers and wholesalers. PBMs profit from DIR fees.” Levitt concludes that: “specialty pharmacies should be aware that they have rights under federal law, that can be vindicated in a court of law.”

About Frier Levitt LLC

Frier Levitt LLC is a premier boutique law firm with offices in New York and New Jersey. Firm attorneys are leading practitioners providing an array of services to healthcare and life sciences clients nationally. Frier Levitt serves the provider community, wholesalers, manufacturers and plan sponsors, large physician group practices, hospitals, hospital medical staffs, ambulatory surgery centers, and laboratory companies. For more than 20 years, the Firm has been and continues to be a leader on PBM contracts and applicable law. Firm attorneys are at the forefront of disputing PBM-imposed DIR fees and have successfully challenged DIR fees against major PBMs, obtaining more than $40M in damages on behalf of its pharmacy clients arising from trials and settlements. For more information, please visit www.frierlevitt.com.

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