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CVS Caremark Faces RICO Class Action

VICTORIA, Texas (CN) - In a RICO class action, six pharmacies claim CVS Caremark pharmacies violate federal privacy laws by collecting "proprietary patient information" it gets from handling claims for non-CVS pharmacies, and using it to solicit business for CVS pharmacies. CVS merged with Caremark in 2007 to create the 18th-largest company in the nation, according to the federal complaint.

The six named plaintiffs claim that the merger created "a company that every retail pharmacy must do business with (as a pharmacy benefit manager), even though CVS Caremark's retail outlets (CVS pharmacies) are direct competitors to non-CVS pharmacies across the country." (Parentheses in complaint.)

The class claims that the CVS Caremark Pharmacy Benefit Manager has contracts to handle claims for clients of at least 2,200 health plans. When handling claims, CVS Caremark "requires that the retail pharmacy supply several pieces of information to CVS Caremark including the name, address, date of birth, and gender of the patient; the identity of the patient's prescribing physician; the prescription data such as medication and dosage; and the pharmacy that dispensed the prescription drugs to the patient," according to the complaint.

CVS Caremark uses this information to form a "complete medical picture" of the clients to market CVS products and services directly to them, the plaintiffs say.

The class claims CVS Caremark violated the US Health Information Portability and Accountability Act by using this patient information "without lawful authority."

The CVS Caremark benefits manager has entered into contracts with at least 525 plan health plans and established pharmacy networks that "explicitly exclude" pharmacies, including plaintiffs, from providing "maintenance medications and 90+ day scripts" to the members of such plans, according to the complaint.

The plaintiffs want an injunction requiring their admission "into such networks and participation on equal terms to CVS-owned retail and mail-order pharmacies."

They also seek judgment declaring void any CVS Caremark contracts that "exclude or disfavor" them, as violations the Texas Any Willing Provider Law.

CVS Caremark is no stranger to the scrutiny of federal and state regulators, the plaintiffs say.

"CVS Caremark is currently under investigation by the Federal Trade Commission and 24 states for issues of competition and privacy, and the State of Texas is currently suing CVS Caremark alleging improper billing practices that cost Texas over $20 billion," according to the complaint.

The pharmacies sued on behalf of a national class of all non-CVS retail pharmacies in the United States, and a Texas class of all non-CVS retail pharmacies in Texas.

The class is represented by Donald Taylor with Taylor, Dunham & Burgess of Austin.

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