Iowa pharmacy slaps Caremark with lawsuit over DIR fees

A newly filed lawsuit accuses pharmacy benefit management giant CVS Caremark of violating antitrust laws by charging huge fees to dispense prescriptions in Medicare Part D.

Pharmacists have pushed back against the direct and indirect remuneration fees, or DIR fees, which are based on quality measures at the pharmacy. These fees have been a part of the conversation on Capitol Hill as legislators consider reforms to the PBM industry.

In the suit, Iowa-based Osterhaus Pharmacy alleges that CVS forces pharmacies into one-sided contracts to ensure network access and is seeking class-action status to represent other independent pharmacies with similar allegations.

Because Caremark represents so many patients as one of three PBMs that dominate the industry, Osterhaus said that it has no choice to comply with onerous restrictions like DIR fees to ensure it can secure reimbursement.

"Independents generally cannot afford to reject the terms CVS Caremark imposes for participating in its Medicare Part D network to provide filing and dispensing services," according to the lawsuit. "They would lose too many sales to potential patients."

In a statement to Fierce Healthcare, a Caremark spokesperson said the company rejects the claims in the lawsuit.

"We believe the allegations are without merit and intend to defend ourselves vigorously," the spokesperson said.

PBMs have been under growing scrutiny from policymakers as they seek solutions for rising healthcare costs. While a legal showdown is ahead, the National Community Pharmacists Association (NCPA) cheered the filing of the lawsuit.

“It’s payback time,” said NCPA CEO B. Douglas Hoey in a statement. “Finally, community pharmacies have a chance to recover DIR fees that were unfairly taken. PBMs have been gaming the system for a long time, and it’s time to turn the tables.”

The NCPA statement noted that Caremark has faced multiple judgements over DIR fees in recent years but said that the PBM "has done nothing to change its ways" as a result. Hoey said it's common for pharmacies to face hundreds of thousands of dollars in fees that they did not plan for.

“These are only the arbitrations that we know about,” said Hoey. “The arbitration process keeps these cases secret. That allows Caremark and the other PBMs to continue to treat pharmacies unfairly and illegally extract junk fees. We are hoping this lawsuit helps to bring these unlawful practices into public view.”