Transparency Fight Over CVS Caremark Contracting Practices Escalates With Lawsuit for Release of University Drug Benefit Contract

Change to Win * Public Citizen

March 3, 2009  

Transparency Fight Over CVS Caremark Contracting Practices Escalates With Lawsuit for Release of University Drug Benefit Contract

Change to Win, Public Citizen Seek Records From Michigan School to Shine Light On Prescription Drug Costs, Increase Transparency in Government Spending

WASHINGTON, D.C. – Change to Win today sued Ferris State University, seeking the release of a government contract between the university and CVS Caremark, a pharmacy benefit management (PBM) company, among other documents. Change to Win is represented by Margaret Kwoka, an attorney at Public Citizen, a nonprofit organization with a history of fighting for government transparency, and by attorney Ted Iorio of the Michigan firm Kalniz, Iorio & Feldstein. The case was brought under the Michigan Freedom of Information Act (FOIA) in Mecosta County Circuit Court.

 “CVS Caremark’s lack of transparency is driving up prescription drug costs for consumers and health plans alike,” said Chris Chafe, executive director of Change to Win. “Michigan law protects the people’s right to know, in this case, what CVS Caremark is charging the university for prescription drug benefits, but also what compensation CVS Caremark may be receiving in the form of undisclosed agreements with drug manufacturers and pharmacies at taxpayers’ expense.”

Change to Win filed the suit after Ferris State University, a public college based in Big Rapids, Mich., partially denied a request for a copy of the CVS Caremark contract. The school released part of the contract but refused to release key portions such as pricing information. Public Citizen and Change to Win assert that the redacted information, such as prices, should also be disclosed. Change to Win is engaged in an effort to increase the public accountability and transparency of drug middlemen, such as CVS Caremark, to allow for public scrutiny of drug benefits and drug pricing practices.  

CVS Caremark Resists Transparency

CVS Caremark is enormously resistant to transparency. The company has taken extraordinary measures to prevent greater disclosure of its practices, including allegedly interfering with audits by its clients, opting out of contract opportunities to avoid greater disclosure and vigorously opposing legislative and other measures to increase transparency in the PBM industry. Last year, CVS Caremark sued the Texas Attorney General to prevent disclosure of a public contract in Texas but dropped its suit on the day of trial last September. The contract has since been made public. A recent study by the Texas State Auditor’s Office found that CVS Caremark’s prices were significantly higher than some competing PBMs, and called on Texas agencies to educate themselves about PBM contracting practices before entering into drug benefit contracts.

“Ferris State University is unlawfully withholding information about its contract with CVS Caremark,” said Kwoka. “Under Michigan law, the full contract, including the prices, should have been released to our client. Michigan FOIA law does not allow the university to withhold information such as prices that are a necessary part of the terms of a government contract. This suit will ensure that Michigan FOIA laws serve the purposes they were meant to, permitting public scrutiny of government practices such as contracting.”

Right to Know in Michigan

Under well-established Michigan law, the people have a right to know how government spends tax dollars through government contracts. The Michigan FOIA provides that information submitted to gain a government contract or other governmental benefit must be released upon public request. The law reflects the public interest in the public availability of basic information that allows for citizen debate and oversight regarding the expenditure of government funds.

CVS Caremark is the country’s second-largest PBM and has contracts with many state entities across the country, including several in Michigan. In 2005, the University of Michigan stopped contracting with Caremark, citing concerns that its pricing practices were not transparent. Many PBM contracts with government agencies, including several Caremark contracts, have been made public in Michigan and other states under Freedom of Information laws.

Public Citizen is representing Change to Win as part of its  Public Interest FOIA Clinic, which was launched last year and is designed to give comprehensive assistance to other nonprofit organizations seeking government-held information. Through the clinic, Public Citizen provides direct FOIA litigation assistance to public interest organizations. Public Citizen lawyers also collect and analyze information about recent FOIA litigation conducted by public interest organizations to identify and address common FOIA problems.

For backgroundand more information, visit: www.AlarmedAboutCVSCaremark.org.

To read the lawsuit, go to: https://www.citizen.org/sites/default/files/ferrisstatefoiacomplaint.pdf

Alarmed About CVS Caremark is a Change to Win initiative to educate health plan managers and trustees as well as consumers about the newly merged CVS Caremark, now the country’s second largest pharmacy benefits manager (PBM) and largest retail pharmacy chain. Change to Win represents workers in CVS Caremark plans that cover more than 10 million people. On behalf of these health plan members, the initiative seeks reform of the PBM industry to protect plan members’ health and privacy.