On July 17, 2024, the Vermont Attorney General, Charity R. Clark, filed a lawsuit in Vermont Superior Court against two of the largest pharmacy benefit managers (“PBMs”) in the country, CVS Caremark and Express Scripts. The suit alleges that these two PBMs—which, according to the complaint, together control approximately 95% of the commercial PBM market in Vermont—have violated the Vermont Consumer Protection Act by engaging in deceptive and unfair practices that have had the effect of driving up pharmaceutical prices for consumers and squeezing independent pharmacies.
PBMs act as intermediaries in the health care system—they manage prescription drug benefits, including by negotiating discounts, rebates and fees with drug manufacturers, creating drug formularies (lists of medications that are covered by insurance) and policies, and reimbursing pharmacies for drugs covered by prescription-drug plans.
The Vermont AG’s complaint alleges that because they control which drugs are placed on the formularies, CVS Caremark and Express Scripts are able to extract payments from the manufacturers in return for favorable placement, which the PBMs retain as profits instead of passing along to payors and patients. It alleges that these PBMs drive up drug prices by giving preference on their formularies to drugs with high list prices—and correspondingly high manufacturer payments—over lower priced drugs. The complaint also alleges that CVS Caremark and Express Scripts pay lower reimbursement rates to pharmacies that are not affiliated with them, resulting in harm to independent pharmacies.
The allegations in the Vermont complaint echo the Federal Trade Commission’s interim conclusions of its ongoing study of the PBM industry.