Recent Case Illustrates Challenges for Independent Pharmacies in Seeking Access to Largest PBM Networks
As the pharmacy landscape continues to consolidate, Pharmacy Benefit Managers (PBMs) continue to wield unprecedented influence over independent pharmacies and their ability to serve patients. A recent federal case, Rx Solutions, Inc. v. Caremark, LLC, spotlights the steep hurdles independent pharmacies face when seeking access to the largest PBM networks and reveals how PBMs monitor common ownership and common association affiliations for network participation.
Background: The Case at a Glance
Rx Solutions, a Mississippi-based independent pharmacy, sought to gain access into Caremark’s PBM network. Caremark is positioned as one of the largest PBMs in the nation. Caremark is owned by CVS Health Corporation. After the Pharmacy’s application was denied, Rx Solutions sued Caremark and CVS, alleging antitrust violations and state law claims. Rx Solutions tried to challenge its exclusion under federal antitrust law, arguing that Caremark and CVS conspired to drive independent competitors out of business. However, the court dismissed these claims, finding that Rx Solutions failed to define the relevant market or demonstrate consumer harm—key requirements for antitrust standing.
The court did, however, revive two state law claims, including one under Mississippi’s “any willing provider” statute, which may restrict PBMs’ ability to exclude pharmacies without good cause. The outcome of these claims could be important for independent pharmacies seeking PBM network access.
PBM Network Access: Critical for Independent Pharmacies
For independent pharmacies, inclusion in major PBM networks is essential for survival. Patients’ prescription benefits are often tied to these networks, and exclusion can mean a dramatic loss of business and the ability to serve patients. Yet, as the Rx Solutions case demonstrates, gaining access is anything but straightforward.
Caremark denied Rx Solutions’ application, citing “incomplete, inconsistent and/or inaccurate information regarding ownership” and later referenced the owners’ family ties to another pharmacy and to a previous owner with prior legal issues. Even after Rx Solutions clarified its ownership structure and pointed out that it had been accepted by eight other PBMs, Caremark stood by its denial.
PBMs Scrutinize Common Ownership and Common Association
This case reveals the depth of PBM scrutiny into pharmacy ownership and associations. Federal regulations require disclosure of any owner or controller convicted of crimes related to federal healthcare programs. But PBMs often go further, investigating familial and business ties spanning over several years that the PBM will allege pose integrity risks, albeit many times in a frivolous manner, even in instances where those individuals have no operational or actual control.
In Rx Solutions’ case, the denial was partly based on the owners’ familial relationship with a previous owner (their father) who owned another pharmacy and had a legal history. Rx Solutions maintained that neither the father nor his sons had operational control over each other’s businesses. Still, Caremark denied the pharmacy’s application.
Broader Implications for Independent Pharmacies
This case highlights several critical challenges:
- Opaque Credentialing: PBMs can deny network access based on broad or inconsistent criteria, including attenuated common ownership or association.
- Ownership Scrutiny: Even indirect or familial ties to individuals with legal histories can will become PBM based grounds for exclusion, regardless of operational control.
- Limited Legal Remedies: Federal antitrust law is hard to invoke successfully with many legal hurdles.
- State Law as a Path Forward: “Any willing provider” statutes and tortious interference claims may offer alternative avenues for relief, but outcomes are uncertain and vary by state.
Conclusion
The Rx Solutions v. Caremark case illustrates the obstacles independent pharmacies face in today’s industry, where PBMs wield unbalanced power over the industry including as to pharmacy and patient access. The case underscores how PBMs’ broad discretion in evaluating common ownership and common association can exclude pharmacies based on connections that may have little bearing on current operations or integrity. While federal antitrust law offers limited recourse, state laws could offer some legal protections. For independent pharmacies, the stakes are high: gaining or losing PBM network access can determine their viability. As the legal landscape evolves, it is crucial for independent pharmacies to maintain rigorous compliance, document ownership transparently, and advocate for fairer network standards. Ultimately, ensuring independent pharmacies have a fair shot at network participation is not just a business issue, but a matter of patient access and healthcare equity nationwide.