CVS Caremark reimbursed some rival pharmacies far less, report claims

In its role as a pharmacy middleman for the Ohio Medicaid program, CVS paid some of its competitors far less than it paid its own stores, according to a copy of an unredacted report for the Ohio Department of Medicaid obtained by The Columbus Dispatch.

The report claims that CVS paid Walmart and Sam's Club pharmacies 46 percent less overall for generic drugs than it paid its own pharmacies. In addition, CVS paid Kroger pharmacies 25 percent less than its own stores. The percentages and drug prices are for the year ending March 31, 2018.

"I don't know how this is legal," Ryan Bane, PharmD, pharmacy director for Riesbeck's Food Markets, which operates five pharmacies in its stores across Ohio, told The Dispatch.

The report shows that the CVS pharmacy benefit management arm, CVS Caremark, would have to pay Riesbeck's pharmacies 29 percent higher rates for generic drugs to equal what it was paying its own pharmacies.

In a statement to The Dispatch, CVS said the reimbursement from its PBM "is competitive across independent pharmacies and chain pharmacies. A pharmacy’s performance measurements affect the reimbursement it receives, such as its medication adherence and generic dispensing rates. Reimbursement rates also vary between the different types of retailers that operate pharmacies."

Under Ohio's Medicaid system, PBMs selected how much they charged the state Medicaid program for a drug and how much they reimbursed each pharmacy for that drug.

Critics say the state report, which CVS is fighting in court to keep secret, suggests CVS was using taxpayer money to boost its position in the Ohio market.

"This is startling information, the degree of difference" between what CVS paid itself versus its large competitors, Thomas Greaney, former assistant chief of the U.S. Justice Department's antitrust division, told The Dispatch.

The unredacted Medicaid report shows big differences in reimbursement rates between CVS and its retail competitors for generic drugs, which made up about 86 percent of drug transactions. There was not a big difference between brand-name drug reimbursements.

Three months before a redacted version of the report was released, the Ohio Department of Medicaid released information that CVS Caremark reimbursed independent pharmacies at a higher rate than its own stores. CVS has long maintained that it pays local pharmacies higher rates than CVS stores, and the reports confirms that.

The unredacted report shows that CVS' biggest competitors in the region faced the biggest disadvantages, not independent pharmacies.

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