Legal Advocacy

Since its creation, American Pharmacies has steadfastly fought for independent pharmacy in the Legislature, in Congress, and in state and federal agencies. Now we've taken our battles to the courtroom.

One Step Closer to an Open Trial
APRx Continuing to Advance Landmark Suit Against CVS Caremark

On Feb. 11, 2013, APRx moved one step closer to an open court trial in its landmark 2010 lawsuit against CVS Caremark that alleges RICO violations and trade secret misappropriation (RICO = Racketeer Influenced & Corrupt Organizations Act).

The 5th U.S. Circuit Court of Appeals rejected CVS-Caremark's appeal of an earlier federal court ruling that most of American Pharmacies' RICO lawsuit against CVS must be heard in open court. The February 11 ruling by the three-judge panel means the lawsuit will now proceed on the merits of the case. CVS Caremark has continuously sought to send the entire case against it and its subsidiaries to arbitration to keep the suit out of the public eye.

ON March 13, the 5th Circuit issued its final mandate affirming the lower court decision. CVS-Caremark had until May 13 to appeal the 5th
Circuit’s ruling to the U.S. Supreme Court and elected not to do so, meaning the case will now proceed to trial at an undetermined date. 

The class-action suit was filed in September 2010 by six APRx board members on behalf of all non-CVS pharmacies. The plaintiffs are: Rogers Pharmacy in Victoria, TX; Brookshire Bros. Pharmacy in Kirbyville, TX; Hometown Pharmacy in Fairfield, TX; Hibbs Pharmacy in Bay City, TX; Kinsey's Pharmacy in Tyler, TX; and De La Rosa Pharmacy in Weslaco, TX. The lawsuit is financially supported by American Pharmacies.

The lawsuit alleges that CVS Caremark violates the firewall between its retail pharmacies and PBM as required by the Federal Trade Commission when it approved the merger in 2007. Instead, the lawsuit alleges, the combined company built an information technology platform that straddles all of CVS Caremark's business segments, capturing in-depth patient data for marketing and other purposes in violation of HIPAA patient privacy laws. About 20 pharmacy and consumer organizations have filed amicus curiae (“friend of the court”) briefs with the court in support of the plaintiffs, and to oppose arbitration of the case. APRx has also received almost $150,000 in supporting contributions to its Legal Defense Fund.

The relief the plaintiff pharmacies seek on behalf of all non-CVS pharmacies includes:
1. That CVS Caremark refrain from violating patient privacy rights; and
2. That CVS Caremark refrain from using a pharmacy’s own patient information against the pharmacy that supplied it (they allege that CVS Caremark uses this information to obtain new customers and to scout and acquire new pharmacy locations).

APRx Awaits Appeals Court Ruling in Texas Medicaid Challenge

APRx is the sole plaintiff in a federal suit filed in Austin against HHSC over its failure to ensure that PBM payments to pharmacies are at levels consistent with the methodology set in Texas's Medicaid state plan and produce a pharmacy network that ensures adequate access to care as required by federal law. APRx is also the sole plaintiff in an appeal asking the Texas Court of Appeals to reverse an April trial court judgment and require HHSC to determine reimbursements to Medicaid pharmacy providers through a methodology established in the open with public input and not in secret and at the sole discretion of a PBM. That appeal is pending.

The Third Court of Appeals in Austin heard arguments on Feb. 13, 2013, from American Pharmacies outside counsel Miguel Rodriguez in the appeal of APRx's lawsuit to require the Texas Health and Human Services Commission (HHSC) to fairly regulate Medicaid reimbursement to Texas pharmacies, as state law requires.

Appeals Court Justices Scott Field, Melissa Goodwin and J. Woodfin Jones heard oral arguments from Rodriguez and an assistant attorney general representing HHSC. Rodriguez argued that HHSC is obligated by state law to establish rules and standards governing the determination of medical assistance (Medicaid) payments made to pharmacy providers, even if those payments are made by managed care organizations (MCOs) and PBMs. After hearing arguments, the three justices took the matter under advisement. They did not indicate when they would issue a ruling, but APRx will communicate it to you as soon as it is made.

On April 26, 2012, American Pharmacies appealed the April 24 district court ruling that dismissed our original lawsuit against HHSC over the implementation of managed care for Medicaid pharmacy benefits.

The lawsuit, filed and financed by American Pharmacies on behalf of all Texas pharmacies, asked the court to find that the Texas Health and Human Services Commission is required to regulate the reimbursement rates paid to Texas pharmacies in the Medicaid managed care program. It also asked the court to strike down HHSC's new regulations for failing to consider less onerous alternatives for small-business pharmacies.

APRx continues to believe strongly that HHSC's decision to allow MCOs and their subcontracted PBMs to arbitrarily establish drastically low reimbursement schemes violates state law.

Federal Suit to Defend Fair Competition & Patient Choice (Humana/Walmart PDP)

On July 11, 2011, APRx filed a federal suit against the U.S. Dept. of Health and Human Services (DHHS) and the Center for Medicare and Medicaid Services (CMS) to stop them from allowing illegal, anti-competitive, preferred pharmacy networks that violate the Medicare Act’s mandate for fair competition. The APRx lawsuit asserts that CMS’ network preferred model violates Congress’ Any Willing Pharmacy Requirement by allowing preferential treatment of some in-network pharmacies. APRx’s landmark suit has already spawned one copycat suit in North Carolina.

The Humana Walmart Preferred Rx Plan that took effect in January 2011 is the first such large plan, allowing Walmart pharmacies to charge lower co-payments for generic and brand-name drugs than non-preferred pharmacies in the same network are allowed to charge. The suit asks the federal court to declare the Preferred Pharmacy Rule illegal and order it set aside.

DHHS and CMS argued in September that APRx has no standing to bring the suit, and that the Medicare Act bars APRx’s lawsuit before HHSC can conduct its own internal agency review.

On December 5, 2011, U.S. District Judge Nelva Ramos held that her court lacked jurisdiction to hear APRx’s claims against DHHS and CMS. APRx appealed that ruling to the U.S. Fifth Circuit Court of Appeals, which heard oral argument of the dispute on November 6, 2012. 

UPDATE:  ON May 1, the 5th Circuit denied our appeal in the Humana Preferred networks case. American Pharmacies is currently weighing its legal options in the case.