The Minnesota Department of Commerce has initiated a contested case against CaremarkPCS Health, LLC (Caremark), a licensed pharmacy benefit manager and part of CVS Health. The Department of Commerce alleges that Caremark has violated the Minnesota Pharmacy Benefit Manager (PBM) Act. 

Most Minnesotans have prescription drug benefits through their health plan that are administered by PBMs in one form or another.  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 medications. 

PBMs must provide a minimum number of in-network pharmacy options to fill prescriptions. Minn. Stat. § 62W.05.  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 nonowned pharmacies as at its owned pharmacies or imposing the same limits at its owned pharmacies as at its nonowned pharmacies. Minn. Stat. § 62W.07(b), (d), Minn. R. 2737.1200. 

Additional PBM standards and requirements can be found on the Commerce website:  mn.gov/commerce/insurance/industry/pbm.   

The Department of Commerce alleges that Caremark’s Maintenance Choice program violates Minnesota law because Caremark required members, after filling their first three maintenance prescriptions, to use a CVS retail or mail-order pharmacy in which Caremark has an ownership interest.  This practice harms Minnesotans. In some cases, members have needed to drive 20 to 130 miles to get to a CVS retail store, rather than refilling medications at a local non-CVS pharmacy much closer to their homes.  

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

Commerce is seeking to stop Caremark’s practices that it alleges violates Minnesota’s PBM laws and to levy a $1.25 million fine. 

Administrative Hearing

This matter will follow the contested case procedure set forth in Minnesota Statutes Chapter 14. A prehearing conference is set for May 31 at the Minnesota Office of Administrative Hearings. Following a formal hearing process, an Administrative Law Judge will decide if Commerce’s case is supported by the law.  

Minnesota pharmacy trends 

The Department of Commerce currently licenses 44 pharmacy benefit managers in Minnesota. PBMs are required to be licensed under Minnesota’s PBM Act. 

In Minnesota, research has shown the number of retail pharmacies declining. (Story on the research: tcbmag.com/the-pharmacy-sickness) 

Across the United States, three pharmacy benefit managers (the “Big 3”) control about 80% of the PBM market, according to Drug Channels Institute’s estimates published on April 5, 2022 (Drug Channels report: drugchannels.net/2022/04/the-top-pharmacy-benefit-managers-of.html) 

All of the Big 3 are owned by conglomerate health systems that also operate health insurance plans:  Caremark is owned by CVS Health, Express Scripts is owned by Cigna, and OptumRx is owned by UnitedHealth Group. 

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MEDIA CONTACT:
Mo Schriner, Communications Director
Minnesota Department of Commerce
mo.schriner@state.mn.us