Minnesota fines CVS Caremark $500,000 alleging improper pharmacy benefit handling

The state Commerce Department has levied a $500,000 fine against CVS Caremark, alleging the pharmacy benefits manager used strategies Minnesota state law doesn't allow to steer consumers to pharmacies its parent company owns.

Insurance companies and employers hire pharmacy benefit managers (PBMs) to structure medication benefits within health plans. That includes designating pharmacies where enrollees can obtain medications at the lowest out-of-pocket cost.

"Some Caremark enrollees complained of being forced to drive up to 130 miles to fill prescriptions," Commerce said Monday in a news release. "Minnesota's Pharmacy Benefit Manager Act prohibits a PBM from requiring or incentivizing a member to use a pharmacy it owns unless the same incentives are available at other pharmacies."

Caremark is a division of Rhode Island-based CVS Health, one of the nation's largest pharmacy companies. In a consent order, the company said it denied the allegations and did not admit liability.

"We maintain that the plan designs chosen by our clients are lawful and compliant," CVS Health said in a statement. "We are also pleased to resolve this matter with the Minnesota Department of Commerce."

The fine, announced Monday, is less than half of the $1.25 million penalty Commerce sought when it first announced in April 2022 its push for a civil monetary penalty in the case. The lower amount "represents Caremark's timely agreement to change its practices and to open its maintenance drug programs to other pharmacies, which will benefit many Minnesotans," Commerce said in a statement.

Commerce said as part of the consent order, Caremark will open a program called Maintenance Choice — as well as other similar programs — to any pharmacy that wants to enroll and accept the network's standard terms and pricing.

The program is meant for patients with diabetes, high blood pressure and other conditions requiring maintenance medications, Commerce said in a news release. As of 2021, about 72,000 Minnesota residents had enrolled in the program, the state said.

"After filling their first three prescriptions, patients were required to use a CVS retail or mail-order pharmacy rather than their preferred in-network pharmacy," Commerce said in a news release.