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Lawsuit over reimbursement fees a factor in independent pharmacy struggles, expert says

In light of two local pharmacies shuttering their doors Wednesday, some are pointing to an ongoing federal lawsuit industry experts say was set into motion by alleged wrongful penalties for prescriptions.

The fees are called pharmacy direct and indirect remuneration fees. They’re charged to pharmacies under Medicare Part D regulations in exchange for other parties, often referred to as pharmacy benefit managers, negotiating prices with drug manufacturers and providing reimbursements to pharmacies.

In September, Iowa-based Osterhaus Pharmacy filed a class-action lawsuit against CVS Health, Caremark and Aetna seeking damages for alleged violations of federal antitrust laws and state laws that govern contracts.

Osterhaus claims CVS’ pharmacy benefit manager asked for exorbitant and unfair fees to dispense prescriptions. Pharmacy benefit managers across the board have been under fire from regulators and legislators over rising drug costs.

Based on complicated and often variable formulas, the benefit managers charge pharmacies — often months after the prescriptions are filled — fees based on the cost of the drugs dispensed.

In the lawsuit, pharmacies complain the fees often exceed the amount pharmacies are reimbursed for drugs from Medicare.

The fees hit small, independent pharmacies the hardest because of their smaller budgets and cash flow.

In numerous reports, CVS says the allegations are without merit.

In an interview with TribLive on Wednesday, Leechburg Health Mart co-owner and pharmacist Alex Micklow said the lawsuit and ongoing reimbursement issues with insurance companies contributed to the closings of his and another Health Mart in Lower Burrell.

“Reimbursements are so bad, we’ve lost $100,000 since Dec. 1, 2023,” Micklow said.

That information didn’t surprise Sharon Gatewood, a professor at Virginia Commonwealth University’s School of Pharmacy. She said the class-action lawsuit stemmed from the direct and indirect remuneration fees with pharmacy benefit managers.

Gatewood noted Osterhaus is a well-known and established independent pharmacy. She said while the class-action lawsuit is trying to get the pharmacy reimbursed, it also aims to set a precedent nationwide. Pharmacy organizations already are talking about pharmacy benefit manager reform federally. Several states are looking to move legislation to help with such reform as well, she said.

She said the direct and indirect remuneration fees have gotten “out of control,” which has affected all pharmacies — but with independent pharmacies taking the biggest hit.

“What it’s ultimately going to do is create ‘pharmacy deserts’ and a decrease in patient access,” Gatewood said.

Gatewood said the case is “long overdue.” She encouraged people to contact their legislators about the issue.

Reporter: Kellen Stepler

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