NY AG Letitia James Sues CVS for “Anticompetitive Scheme” to “Siphon” 340B Program Savings

On Thursday, New York Attorney General Letitia James filed a complaint in the Superior Court of New York against CVS Health Corp. for CVS’ “ongoing anticompetitive scheme” that forces hospitals to purchase administrative services from CVS’ subsidiary, Wellpartner LLC.

Through the federal 340B Program, health centers can purchase outpatient drugs at “significantly reduced” prices, the complaint says. Wellpartner is a third-party 340B administrator (TPA) that provides technology services to hospitals. According to the complaint, since Wellpartner was acquired by CVS, partnered hospitals were told that “if they want to realize 340B Savings from patient prescriptions filled at CVS pharmacies and CVS specialty pharmacies, they have to use Wellpartner as their TPA.”

Attorney General James argued that this “constitutes an illegal tie prohibited by the Donnelly Act.” Utilizing 340B savings is vital to a lot of health centers as these entities have to “rely” on 340B savings to protect and serve “underserved and vulnerable populations” so they are essentially forced by CVS to accept Wellpartner as their TPA.

As a result of this “scheme,” CVS has been able to “siphon off” 340B savings by exerting the force of their market power as one of the top two pharmacy chains in the country. This is in concert with CVS Caremark, which is “one of only three major Pharmacy Benefit Managers” that effectively “‘steer’ patients (including non-340B patients) to CVS pharmacies over other competing pharmacies.” This reinforces CVS’ power to pressure healthcare facilities into choosing Wellpartner as their TPA, and thus making profit off of their 340B savings and pharmacy prescriptions. In an attempt to end these practices, Attorney General James is suing for violations of the Donnelly Act, New York General Business Law, and New York Executive Law.

The State of New York is seeking an order declaring CVS has violated the Donnelly Act and New York General Business Law, an injunction of the illegal conduct, divestiture of Wellpartner, restitution and disgorgement, civil penalties, an additional allowance of $20,000, attorney’s fees and costs, and other relief.