Bloomberg Law – HIV Bias Suit Against CVS Tests Bounds of Obamacare Protections

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By Lydia Wheeler, BLOOMBERG LAW

January 8, 2021

  • Mail-order drug policy at issue in proposed class action
  • Decision could clarify antidiscrimination protections 

Californians with HIV and AIDS are taking on their drug plan middleman in a fight over how they get the medications they need to survive.

Their proposed class action against CVS Caremark—green-lighted by a federal appeals court last month—is testing the bounds of the Affordable Care Act’s antidiscrimination protections and could open the door to more litigation against powerful pharmacy benefit managers (PBMs) that control how drug benefit plans operate.

The case has the potential to bring more clarity to how Obamacare’s antidiscrimination protections are interpreted, said Elizabeth Pendo, a law professor at Saint Louis University Law School, who specializes in disability discrimination.

“These types of cases are incredibly important, and they are coming at a time when there’s a lot of uncertainty because of multiple legal challenges to the expansive idea of health-care access and nondiscrimination that we had during the Obama administration and a more limited or restricted idea of that during the Trump administration,” she said.

‘Disparate Impact’ 

The plaintiffs argue CVS Caremark, which administers and controls their employer health plan’s drug benefits, threatened their health and privacy by forcing them to get their specialty prescriptions filled by mail order or drop shipment to a CVS pharmacy for pickup. They’d have to pay the out-of-network insurance rates or full price to get their drugs at a pharmacy of their choosing.

One potential member of the nationwide class, who spoke with Bloomberg Law on the condition of anonymity, said they would have to pay over $1,300 out of pocket for a 30-day supply of Biktarvy if they used a pharmacy of their choice. The drug, used to help control HIV infection, otherwise costs $300 for a three-month supply under their health plan. The plaintiffs in the case are listed only as John Doe to protect their privacy. 

CVS Caremark said it treats all of its specialty drugs the same and they include treatments for disabled and non-disabled individuals alike. There are over 300 drugs on the list, including contraceptive devices and drugs that treat osteoporosis, arthritis, and asthma. Even though CVS said its policy is not intentionally discriminatory, the individuals with HIV and AIDS say they are being disproportionately impacted by a program that applies to all plan participants.

“Our goal here is to make sure that people with any pre-existing condition, or chronic illness, or disability can get the life-saving medication in a medically appropriate manner, they can get it in a way that doesn’t undermine their health,” said Jerry Flanagan, litigation director for Consumer Watchdog and one of the attorneys representing the patients’ in the case.

The U.S. Court of Appeals for the Ninth Circuit ruled Dec. 9 that the plaintiffs’ Obamacare bias claims could proceed after they were initially tossed out by the district court. The appeals court said patients can bring a claim of disability discrimination under Section 1557 of the ACA if they are disproportionately impacted by a policy. The ACA provision, which is based on existing civil rights laws, prohibits discrimination on the basis of sex, age, or disability in certain health-care programs. 

CVS Caremark asked the full court of appeals on Dec. 23 to overturn the ruling, arguing any limits on a health plan could be challenged under its reasoning.

“If allowed to stand, the panel decision threatens to open the door to ‘disparate impact’ claims based on any number of commonplace plan designs, with potentially enormous costs to the healthcare system,” CVS Pharmacy Inc. and CVS Caremark warned in their petition for a rehearing.

PBMs play an active role in shaping employee health benefits and could find themselves at a greater risk of being sued for discrimination over other decisions if those decisions hurt some health plan participants and not others, one law scholar said.

“There are lots of reasons why distribution and economics would encourage distribution to the home, but PBMs make a lot of other decisions that affect drugs that are a lot less defensible, at least defensible from a social perspective,” said Barak Richman, professor of law at Duke University School of Law, whose research is focused on health-care policy. 

Plan Design 

In July the Ninth Circuit held in Schmitt v. Kaiser Foundation Health Plan of Washington that Section 1557 of the ACA bars discrimination against people with disabilities in the design of insurance plan benefits.

The complaint filed against CVS Caremark is based on the same idea, “that 1557 specifically bars disability discrimination in insurance and benefit plan design,” Pendo said.

But a CVS spokesman said in a statement that PBMs like CVS Caremark are not plan sponsors and don’t make benefit design decisions for clients.

“We offer clients numerous clinical tools and pharmacy network options, including an option for clients to allow members with HIV to fill HIV-related medications at in-network local independent pharmacies and other national chain retail pharmacies,” Mike DeAngelis, senior director of corporate communications, said. “Each client selects the options that best meet its benefit plan objectives.”

Flanagan disagrees. CVS designed the benefit plan and can’t provide an option to a client that is discriminatory, he said, noting that Consumer Watchdog sued the employers involved as well. Those claims were dismissed by the district court and the Ninth Circuit.

“What CVS is trying to do here is paint the Ninth Circuit’s decision as doing something that’s brand new,” he said. “The Ninth Circuit found that Section 1557 merely applies existing civil rights laws and the plaintiffs here have met the requirements of existing law.”

The cases are Doe v. CVS Pharmacy, Inc., 9th Cir., No. 19-15074 and Doe One v. CVS Pharmacy, Inc., N.D. Cal., No. 3:18-cv-01031.

To contact the reporter on this story: Lydia Wheeler in Washington at [email protected]

To contact the editors responsible for this story: Fawn Johnson at [email protected]; Brent Bierman at [email protected]

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