What a PBM Does
Pharmacy benefit managers sit between drug manufacturers, insurers and pharmacies. They negotiate rebates, decide which drugs appear on a formulary and at what tier, and set what pharmacies are reimbursed.
That intermediary position is the source of the litigation. The same organisation influences what a plan pays, what a pharmacy receives and what a patient is charged, and the differences between those figures are what claims focus on.
Spread pricing explained
Spread pricing is where a PBM charges a health plan more for a drug than it reimburses the pharmacy, retaining the difference. State enforcement actions have targeted whether that spread was disclosed to the plans paying it.
The Main Claim Types
Rebate claims allege manufacturer rebates negotiated on list price created an incentive toward higher list prices, with patients whose costs are calculated on list price bearing the consequence at the counter.
Pharmacy claims concern reimbursement below acquisition cost and fees recouped after the fact, which independent pharmacies argue makes dispensing certain prescriptions loss-making.
Patient access claims concern formulary exclusions and step therapy requirements that oblige a patient to fail on a cheaper drug before a prescribed one is covered.
What Patients Can Do
If a medication is denied or excluded, request the formulary exception process in writing with prescriber support explaining why alternatives are unsuitable. Plans must maintain such a process and respond within set timeframes.
Compare the cash price against your copay, since for some generics the cash or discount card price is lower than the insured copay. Ask the pharmacist directly, as this is often not volunteered.
Gag clauses are prohibited
Federal law prohibits contract terms preventing a pharmacist from telling you that paying cash would cost less than your insurance copay. If you ask, they are permitted to tell you.
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CVS Caremark Lawsuits: Pharmacy Benefit Manager Pricing and Access Claims: Frequently Asked Questions
Answers to the most common questions about this case and your legal options.
What is a pharmacy benefit manager?
An intermediary that negotiates drug rebates, sets formularies and tiers, and determines pharmacy reimbursement between manufacturers, insurers and pharmacies.
What is spread pricing?
Charging a health plan more for a drug than the PBM reimburses the pharmacy, keeping the difference. Enforcement has focused on whether the spread was disclosed.
What are the main claims?
Rebate structures allegedly inflating list prices, pharmacy reimbursement below acquisition cost, and formulary exclusions or step therapy limiting patient access.
What if my medication is excluded?
Request the formulary exception process in writing with prescriber support. Plans must maintain such a process and respond within set timeframes.
Can a pharmacist tell me if cash is cheaper?
Yes. Federal law prohibits gag clauses preventing pharmacists from disclosing that the cash price is lower than your copay, so ask.
Legal Disclaimer
This article is general legal information, not legal advice, and does not create an attorney-client relationship. Case status, eligibility criteria, and any amounts described are as reported at the date shown and may change. Consult a licensed attorney in your jurisdiction about your own situation.