Providence, RI – A Rhode Island federal judge on Thursday dismissed Caremark from long-running litigation alleging CVS schemed with pharmacy benefit managers (PBMs) to overcharge insured health plans for generic drugs. The judge ruled that Caremark’s contracts with the benefit funds contain enforceable arbitration clauses.
U.S. District Judge William E. Smith noted in his order that PBM Caremark has identified approximately 2,600 benefit funds with contracts requiring either arbitration or mediation before litigation. Due to these contractual provisions, both the benefit funds and Caremark — a subsidiary of CVS — agreed that the court should dismiss Caremark from the case, Judge Smith stated.
Regarding CVS, Judge Smith pointed out that the company is not a party to the contracts. However, the question remains if CVS may invoke alternative dispute resolution provisions to get some claims dismissed or exclude those benefit funds from the class certified in 2021. Judge Smith said this question must be delegated to an arbitrator.
