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Minnesota seeking $1.25M fine against CVS Caremark over alleged unlawful PBM practices

The Minnesota Department of Commerce has initiated a contested case against CVS Health's pharmacy benefit management subsidiary, Caremark, for allegedly violating the Minnesota Pharmacy Benefit Manager Act.

The state is accusing the pharmacy benefit manager of requiring members to use a CVS retail or mail-order pharmacy, where Caremark has an ownership interest, after filling their first three maintenance prescriptions, according to an April 28 press release.

In February 2021, about 72,000 Minnesota residents were covered by health plans that enrolled members in Caremark's Maintenance Choice program for members with ongoing conditions treated by maintenance prescriptions, ranging from diabetes and high blood pressure drugs to cancer and Alzheimer's medications.

Under Minnesota law, PBMs must provide a minimum number of in-network pharmacy options to fill prescriptions. A PBM cannot require or incentivize a covered member to use a pharmacy it owns unless certain other conditions are met, such as providing the same incentives at non-owned pharmacies as at its owned pharmacies or imposing the same limits at its owned pharmacies as at its non-owned pharmacies.

The state claims that some Caremark members were being forced to drive 20 to 130 miles to get to a CVS retail store to refill their medications.

The state is looking to stop Caremark's alleged practices and levy a $1.25 million fine.

A prehearing conference will take place May 31 at the Minnesota Office of Administrative Hearings. After a formal hearing process, a judge will decide if the case can move forward.

"This case demonstrates the importance of regulating PBMs in order to protect Minnesotans' access to the critically important healthcare that pharmacies provide," Commerce Commissioner Grace Arnold said. "The practices uncovered in this case show a corporation placing priority on its own profits rather than serving people."


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