Louisiana Lawsuits Against CVS Health Over Customer Data Abuse

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Visual representation of the lawsuits against CVS Health in Louisiana over customer data abuse and unfair practices.

News Summary

Louisiana has filed lawsuits against CVS Health, alleging misuse of customer data and unfair trade practices that impact consumers and independent pharmacies. Attorney General Liz Murrill announced the lawsuits following a controversial mass text campaign by CVS urging residents to oppose legislation reforming its business practices. Allegations include price inflation and deceptive messaging affecting vulnerable populations. Governor Jeff Landry supports the lawsuits, highlighting CVS’s market control and the economic strain on smaller pharmacies. The state aims to reform CVS’s operations and the role of pharmacy benefit managers in Louisiana.

Louisiana has initiated several lawsuits against CVS Health, alleging the company has abused customer data and engaged in unfair trade practices that have negatively affected both consumers and independent pharmacies. The lawsuits were made public by Attorney General Liz Murrill following CVS’s controversial mass text campaign sent to Louisiana residents on June 11. This campaign urged recipients to oppose a piece of legislation aimed at reforming CVS’s business practices.

The legal actions have been filed in St. Landry Parish, seeking injunctive relief, civil penalties, and restitution for affected consumers. Governor Jeff Landry, a Republican, has voiced strong support for these lawsuits, asserting that CVS misused private customer data to push a political agenda. The same messaging system typically used for prescription notifications was reportedly used to lobby Landry’s wife and other state residents.

Among the allegations in the lawsuits, one claims CVS’s messaging campaign breached state trade laws by engaging in “unfair or deceptive acts.” Additionally, two law firms based in Louisiana have filed a separate class action lawsuit regarding the mass text messages sent to CVS customers. CVS, countering the allegations, has denied any wrongdoing. The company claims that their communications were legal and designed to inform customers about potential service disruptions, labeling the lawsuits as unfounded.

The lawsuits further allege that CVS has artificially inflated drug prices and misused its standing as a pharmacy benefit manager (PBM) to suppress competition and maximize profits. A report from the Federal Trade Commission reveals that CVS, alongside its subsidiary Express Scripts, controls approximately 80% of prescription drug claims, which significantly contributes to inflated prices faced by consumers and independent pharmacies in Louisiana.

CVS runs 119 retail pharmacies across the state, granting the company substantial control over the terms for prescription drugs. The contested legislation, which triggered CVS’s alarming text message campaign, aimed to disallow PBMs from owning drug stores. However, this legislation did not pass.

Murrill has claimed that CVS’s business model manipulates prices and imposes high fees on independent pharmacies, resulting in economic strain on these smaller operations. In contrast, CVS argues that it should not be forced to pay higher rates to less efficient pharmacies, maintaining that doing so would impose additional costs on consumers. CVS asserts its role as a crucial partner in reducing prescription drug prices in Louisiana.

Another lawsuit accuses CVS of leveraging its market control to favor high-rebate, high-cost brand drugs over more affordable options, causing overall costs to rise for state public health programs and residents. CVS also contends that if it exited the Louisiana market, it could impose a cost increase on the state of over $4.6 million.

Looking ahead, Governor Landry has indicated intentions to pursue new legislation focused on reforming CVS’s practices and the operations of pharmacy benefit managers, should existing laws prove inadequate. The text messages circulated by CVS have been described as deceptive by Murrill, especially concerning their implications for vulnerable populations such as seniors and veterans, who were warned they might lose access to necessary medications.

CVS’s subsidiary Caremark holds the PBM contract that provides prescription coverage for many state employees and public school teachers, underscoring the significant role CVS plays in the state’s pharmaceutical landscape. The current lawsuits reflect broader concerns about the influence of PBMs like CVS on drug pricing and their detrimental impact on independent pharmacies, which frequently argue they are disadvantaged by the practices employed by larger corporations.