CVS sues state to block release of report on its drug pricing

July 16, 2018

CVS Caremark is suing the Ohio Department of Medicaid to block it from releasing the full report detailing how the pharmacy middleman charged taxpayers three to six times as much to process prescription drugs for the poor and disabled as the industry standard.

"The disclosure of proprietary information in the Caremark agreements would be devastating to Caremark's entire nationwide business model," CVS attorneys argued in an 18-page request for a temporary restraining order filed Monday in Franklin County Common Pleas Court.

The "strategies and processes used by Caremark in Ohio are closely related to the strategies and processes used by Caremark nationwide,” the pharmacy giant argued in its filing.

At the request of The Dispatch, and over the objections of CVS, Department of Medicaid officials planned to release the commissioned report on Tuesday. Medicaid officials previously released an executive summary, arguing that the full report contained proprietary information and could not be released under state public record laws.

“Our preference is to always be as transparent as possible, but the department did not release the full report from HealthPlan Data Solutions out of concern that information or analysis contained in the report was…confidential and proprietary,” Medicaid Director Barbara Sears wrote in a letter to Gary Rutherford of the consulting firm hired to conduct the study.

“However, after a complete review, Ohio Medicaid has concluded that Ohio’s Public Records Act and the public benefit of having access to the full report takes precedent over other concerns," Sears wrote. She also said legislators and "other state investigative agencies" also had requested the complete report.

In CVS' court filing, the corporation's Columbus attorney, Kevin R. McDermott, said the pharmacy benefit manager “repeatedly asked the Ohio Department of Medicaid to protect Caremark’s proprietary information in this report from public disclosure” and “proposed redactions to the report that would allow for the disclosure” while protecting “confidential, proprietary and trade secret information.”

CVS attorneys said they were informed Friday that Medicaid officials intended to release the report Tuesday at 5 p.m.

Medicaid spokesman Tom Betti said redacting the information would leave almost nothing in the report to release.

“We are disappointed — but not surprised — that the PBMs would go to such lengths to try to block Ohio Medicaid’s efforts to bring more transparency to pharmaceutical costs. Transparency is in the best interest of the public and we are hopeful that the public’s interests will ultimately be served,” Betti said.

>>Don't miss our Reddit AMA from July 17, 2018 with reporters Marty Schladen, Cathy Candisky and Lucas Sullivan about the Side Effects series and the rising cost of prescription drugs.  Find it here

A hearing on CVS' request will be held Tuesday morning before Common Pleas Judge Charles Schneider.

According to an executive summary of the report released by Medicaid officials in June, pharmacy benefit managers, or PBMs, billed taxpayers $223.7 million more for prescription drugs in a year than they reimbursed pharmacies to fill those prescriptions.

That 8.8 percent difference, known as the price spread, represents millions kept by CVS Caremark, the PBM for four of Ohio Medicaid's five managed care plans, and Optum Rx, the PBM for the other. Largely pass-through operations, PBMs negotiate drug prices with manufacturers and process drug claims.

The study said PBM fees should be in the range of 90 cents to $1.90 per prescription. CVS Caremark billed the state about $5.60 per script; Optum charged $6.50 — three to six times higher.