New York's attorney general is suing CVS Health, alleging that the company prevented some safety net hospitals from receiving millions in 340B discounts.
AG Letitia James' suit contends that the healthcare giant required safety net hospitals and clinics across the state to contract with one of its subsidiaries, Wellpartner, to obtain federal 340B subsidies on prescriptions filled at its pharmacies. The suit alleges that these business practices deprived hospitals of key funding they could have used to improve patient care.
James is suing with the goal of preventing CVS from continuing to engage in these practices, according to an announcement from the AG's office.
"CVS’s actions are a clear example of a large corporation using its clout and power to take advantage of institutions and vulnerable New Yorkers, but my office will not allow it," James said in a statement. "We are taking action to stop CVS’s harmful practices and recoup critical funds to improve health care for our communities. When powerful corporations undermine the health and wellbeing of vulnerable communities in New York, they can expect to hear from my office.”
CVS acquired Wellparter in 2017 and shortly thereafter began requiring hospitals to use it as a third-party administrator rather than another firm, according to the lawsuit. An investigation conducted by James' office found that CVS would not contract with hospitals that did not use Wellpartner, which violates state antitrust laws, the suit claims.
Hospitals had little choice beyond agreeing to work with Wellpartner if they wanted to secure the 340B funds, the lawsuit says.
CVS said in a statement to Fierce Healthcare that the allegations in the lawsuit are "without merit and we will defend ourselves vigorously."
“New York’s Covered Entities enjoy a highly competitive retail pharmacy marketplace when choosing 340B contract pharmacies. Our integrated 340B offering helps vulnerable populations by providing additional, convenient retail pharmacy locations dispensing discounted prescriptions to patients," CVS Health said.
"In fact, CVS Health’s participation in the 340B program delivered approximately $2.2 billion in savings to 340B providers in 2021, and over $200 million in New York, more than doubling the savings offered to New York Covered Entities in 2017," the company said in the statement. "Through our efforts, we’ve also expanded the number of available pharmacies that participate, creating greater access to New York patients being served including underserved populations."
In addition to getting the company to change its policies, James' office is seeking monetary relief for lost hospital revenue and the additional costs safety net facilities incurred. It is also seeking monetary penalties on CVS.