As CVS Caremark Seeks to Upend Texas Independent Pharmacies' Case, NCPA Argues to Allow Legal Process to Continue

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Alexandria, Va. - June 13, 2011

The National Community Pharmacists Association (NCPA) has filed an amicus curiae in opposition to CVS Caremark's motion to dismiss a federal class action case brought by six independent community pharmacies in Texas and compel arbitration instead. CVS Caremark is trying to prevent the plaintiffs who brought the case last September from having their day in court.

The lawsuit, filed by board members of American Pharmacies, accuses CVS Caremark of misusing confidential patient information that independent community pharmacies are required to provide to the company's pharmacy benefit manager (PBM), Caremark, to steer those same patients to CVS Caremark's retail or mail order pharmacies. The lawsuit further alleges that CVS Caremark's conduct violates the Health Insurance Portability and Accountability Act (HIPAA) and Texas' any-willing provider law, as well as being contrary to the company's pre-merger pledge to be "agnostic" as to where patients fill their prescription. CVS Caremark had previously committed to a firewall between the two companies with regards to patient information. In the brief written for NCPA by the Law Offices of David Balto, presented in the U.S. District Court for the Southern District of Texas, NCPA contends that:

  • The arbitration clause was part of a contract between small, independent pharmacies and the billion-dollar CVS Caremark Corporation that was not the subject of a fair contract negotiation. Rather it was a take-it-or-leave-it arrangement that gave the independent pharmacist no alternative but to sign it. As such the arbitration clause should not be enforced.
  • The terms of the arbitration clause are so one-sided as to be "unconscionable" under applicable state law. For that reason, the court should find the arbitration requirement invalid.

"This case is yet another example of the one-sided nature of the billion-dollar PBMs' relationship with community pharmacies—the same pharmacies that make up the backbone of its network," said NCPA Executive Vice President and CEO B. Douglas Hoey, RPh, MBA. "Whether it is sudden, drastic reductions in reimbursements—such as MAC pricing—or one-sided audits, community pharmacies are subject to the whims of the PBMs. The argument being made against the pharmacies that brought this case is based on a non-existent premise—that somehow CVS Caremark and independent community pharmacies have the same amount of leverage in contract negotiations, so arbitration is an effective remedy for addressing the grievances."

Hoey added, "NCPA will continue to stand up for independent community pharmacies and the patients they serve whenever they are threatened by unfair business practice or policies."

The National Community Pharmacists Association (NCPA®) represents the interests of America's community pharmacists, including the owners of more than 23,000 independent community pharmacies, pharmacy franchises, and chains. Together they represent a $93 billion health-care marketplace, have more than 315,000 employees including 62,400 pharmacists, and dispense over 41% of all retail prescriptions. To learn more go to or read NCPA's blog, The Dose, at

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