Caremark sued; price-fixing, kickbacks alleged

October 3, 2003
Ryan Mahoney, Staff

Two independent pharmacies have sued Birmingham-based Caremark Rx Inc. and the other three big U.S. prescription benefits managers, alleging illegal practices aimed at putting them and other small drug stores out of business.

Four separate suits against Caremark, Express Scripts Inc., Medco Health Solutions Inc. and AdvancePCS Inc. - which Caremark is buying to become the No. 2 player in the industry - were brought by North Jackson Pharmacy Inc. of Stevenson, Ala., and Big C Discount Drugs of Thomaston, Ga. They were filed in U.S. District Court in Birmingham by local HMO lawyer Archie Lamb.

The four PBMs, which buy prescription drugs from manufacturers for employers and others, collectively oversee benefits for roughly 70 percent of the U.S. population.

The plaintiffs, who are seeking class-action status, claim Caremark and company charged independent pharmacies unfair additional costs for their services and forced health plan members to use PBM-owned mail-order pharmacies instead of traditional ones.

They also say the PBMs artificially depressed prescription prices paid to pharmacists and accepted rebates, discounts and other incentives from drug manufacturers in exchange for promoting their products to physicians and pharmacists.

"PBMs have one goal: to control the prescription drug retail marketplace," says North Jackson president Bryan Hicks. "If left unchecked, PBMs will obliterate the remaining 25,000-plus independent pharmacies today and tomorrow will set their sights on all pharmacies."

"PBMs have a long history of deceptive and abusive business practices," Lamb says, "and we have only seen the tip of the iceberg."

Lamb also represented thousands of doctors in a class-action case against the nation's major health maintenance organizations. Aetna Inc. and Cigna Corp. recently settled for a combined $200 million; other HMOs are still fighting the charges.

Caremark, which is in the process of relocating to Nashville, Tenn., says it has not yet reviewed the suit, but that the allegations against it "fundamentally mischaracterize Caremark's business practices and are without merit."

© 2003 American City Business Journals Inc.