David vs Goliath? Independent Pharmacy Sues PBMs Over Fees

As 2023 came to a close, Osterhaus Pharmacy, an independent pharmacy in Iowa, sued UnitedHealth and its pharmacy benefit manager (PBM) OptumRx over what the pharmacy called “unconscionable” fees. This lawsuit follows the recent filing of a similar lawsuit against CVS and its PBM, Caremark, by the same pharmacy.

The pharmacy alleges that it and other independent pharmacies are forced into agreeing to ‘unconscionable’ fees, called direct remuneration fees (DIR). According to the complaint from 2010 to 2020, these fees increased by more than 100,000%, and from 2020 to 2021, DIR fees increased an additional 33% to $12.6 billion.

The lawsuit alleges a violation of federal antitrust law, claiming that the PBMs deny pharmacies access to their Medicare Part D beneficiaries’ network unless the pharmacies agree to the DIR fees. The DIR fees, claim the pharmacy, are tied to performance metrics it does not control (such as patient outcomes or the physician’s choice of medications). The complaint alleges that 3 of the 6 PBMs (CVS Caremark, Express Scripts, and OptumRx) control more than 80% of prescriptions filled in this US. The lawsuit claims that independent pharmacies must accept these fees and contract terms or lose their relationship with the PBM, which would destroy their business. The pharmacy claims that, in some cases, drugs are being dispensed for less than the cost of the medication due to the DIR fees, causing a financial drain on the pharmacy.

The lawsuit notes that “Independents are closing in significant numbers in key locations across the nation. They face increasing financial pressure from PBMs, which keep reducing reimbursements to increase their own profits. The trend toward vertical consolidation in the pharmaceutical services industry has exacerbated matters, as PBMs now benefit by placing independents at a disadvantage to their in-house pharmacies.” In the last several decades, independent pharmacies have been closing in droves, leaving ‘pharmacy deserts’ where patients may have trouble getting to a pharmacy. The lawsuit blames this trend on the greed of PBMs and asks the court to declare that DIR fees are unconscionable and to award restitution. The pharmacy has asked for a jury trial on the matter.

References

1. Osterhaus Pharmacy, Inc. v UnitedHealth Group Inc; Optum, Inc.; OptumRX, Inc.; OptumRx Holdings, LLC. 2:23 US 1-32.
2. Osterhaus Pharmacy, Inc. v CVS Health Corporation. 2:23 US 1-29