BCBS Suit Targeting CVS Generic Drug Prices Progresses Toward Trial

Thirteen Blue Cross and Blue Shield (BCBS) carriers are suing CVS Health over the prices it charges for some generic drugs in its $4 drug program. The insurance carriers claim that CVS improperly manipulated the “usual and customary prices” of those drugs. The carriers initially filed five separate suits in 2020 that were eventually consolidated in U.S. District Court for the District of Rhode Island.

As the case progresses, U.S. District Chief Judge John McConnell Jr. issued rulings on proposed testimony from five witnesses that the parties may offer as evidence at trial. McConnell allowed CVS to retain the testimony of two witnesses whom BCBS opposed and allowed BCBS to retain the testimony of two witnesses whom CVS opposed. The judge will also permit testimony by BCBS’s proposed witness, Dr. Adam Block, but with limitations; Block cannot testify about legal opinions on what federal laws and regulations require of pharmacies.

According to BCBS, CVS sought to better compete with Walmart by reducing the cost of some generic prescription drugs to $4 for cash customers only. However, CVS then excluded the $4 cash-pay price from its “usual and customary prices” calculation by founding a discount club that made the $4 prices available to anyone who signed up. The BCBS carriers claim that CVS should have charged plan participants prices based on the true “usual and customary prices” for the drugs, not prices calculated by excluding the $4 cash-pay prices.

In response, CVS argues that BCBS’s original complaint incorrectly identified some relationships between CVS and Aetna. CVS further alleges that the Employee Retirement Income Security Act (ERISA) and other laws bar the suit and that any such suit is subject to an arbitration agreement.

The outcome of this case could determine how federal courts treat the discrepancies between cash prices and the calculation of benchmark drug prices.