A woman in California has filed a lawsuit against CVS Health Corp., claiming the pharmacy chain charges customers excessive amounts for prescription copayments.
The litigation might be elevated to a class-action case.
“CVS intentionally bills customers who use their insurance more for the Affected Drugs compared to customers who pay cash or choose not to use their insurance,” the complaint alleges. The term “Affected Drugs” refers to certain generic medicines that CVS is accused of charging too much for.
According to the complaint, plaintiff Megan Schultz’s situation unfolded like this:
“On July 6, 2017, she used her insurance to buy a particular generic medication at her neighborhood CVS, and under her plan she was required to pay $165.68. But if she had paid cash, without using her insurance, she would have paid only $92. CVS did not inform her that paying cash would have resulted in a 45% lower charge; rather, CVS stayed silent and took her money—fully aware that no reasonable consumer would choose that option.”
The suit levels numerous accusations against CVS, including racketeering (a legal term often used in fraud claims) and conflicts of fiduciary duty.
Michael DeAngelis, a CVS spokesperson, told Bloomberg: “The allegations against us in this proposed class action are based on a false premise and are entirely without merit.”
Why Pharmacies Charge Different Prescription Copays
This pricing discrepancy stems from contracts with pharmacy benefit managers (PBMs), which are third-party administrators that negotiate drug prices and formularies with pharmacies and insurers. Pharmacies that secure agreements to accept more insurers can attract more customers to fill prescriptions — and collect the copays those insurers require, often without customers questioning them.
“The linchpin of the scheme,” the complaint explains, “is that the consumer pays the amount negotiated between the PBM and CVS even if that amount exceeds the price of the drug without insurance.”
The tactic in which the PBM retains the difference between the insured copay and the cash price is known as a clawback. This close arrangement between PBMs and pharmacies persists until a customer becomes aware.
Bloomberg has tracked this topic and outlined clawbacks in a February piece that highlighted gag clauses preventing pharmacists from telling customers about cheaper cash prices. Several states have since banned those gag clauses.
Ways to Make Sure You’re Paying the Best Price for Medications
Start wondering whether you’ve overpaid on prescription copays?
There are practical steps you can take to avoid the situation described in the lawsuit.
When you receive a new prescription, don’t hesitate to call the pharmacy and ask what the price would be if you paid cash. If the medication is expensive or lacks a generic version, ask the pharmacist about discount programs or available coupons.
You can also look up your medicine and dosage on sites like LowestMed or GoodRx to compare local prices.
Reviewing your insurer’s drug formulary will inform you whether your new prescription is covered and what copay you should expect.
Suspect CVS charged you too much for prescription copays? We’ll provide updates if this litigation advances to class-action status.
