New York Attorney General Letitia James sued CVS Healthalleging the company violated antitrust laws by requiring safety-net hospitals to exclusively use one of its affiliates when filling 340B-eligible prescriptions, in today’s small hospital and industry news from the District of Columbia, New York and North Carolina.
- District of Columbia: HHS‘ Office of the Inspector General (OIG) last week reported that CMS has failed to recover hundreds of millions of dollars in Medicare overpayments. In an audit, the OIG found that CMS has recovered only $272 million of the $498 million in overpayments that were first identified in 2018. In addition, proper documentation was available for only $120 million of the recovered funds . The OIG recommended that CMS recover the remaining $226 million, standardize transaction data, and provide guidance to contractors on how to submit financial information to the agency. “The combination of a significant balance of uncollected overpayments, inappropriate policies and procedures, and unimplemented recommendations increases the risk that CMS will not collect millions of dollars owed to Medicare trust funds,” the OIG said. However, a CMS spokesman said the numbers in the OIG report are outdated, adding that the agency has collected 75% of total overpayments and continues to recover more. (Hartnett, Modern health care28/7)
- New York: New York Attorney General Letitia James filed a lawsuit Thursday against CVS Health, alleging the company violated antitrust laws and negatively impacted the state’s safety net hospitals and clinics. In the lawsuit, James accused CVS of an “ongoing anticompetitive scheme” by requiring safety-net hospitals and other providers in the Federal 340B Drug Pricing Program to purchase administrative services from Good partner, a CVS-owned subsidiary, if they would like to process 340B-eligible prescriptions through CVS pharmacies. According to Hill, this requirement was established in 2017 when CVS first acquired Wellpartner. “CVS’s actions undermine the purpose of the 340B Program and harm the financial condition of safety net health care providers,” the lawsuit argued. “By its illegal affiliation, CVS has harmed the competitive process and caused substantial harm to the market for the provision of TPA Services in New York by precluding the ability of other TPA providers to compete on the merits.” In response to the lawsuit, CVS spokesman Philip Blando said the allegations are “baseless” and that the company would “vigorously” defend itself against the claims in the lawsuit. (Lead, Hill, 7/28; New, Political Pro [subscription required], 7/28; Jacob, Wall Street Journal, 7/28; Pierson/Meshra, Reuters28/7)
- North Carolina: Labcorp on Thursday announced plans to spin off a new independent company focused on clinical development. According to Wall Street Journal, the new business will manage Phase I-IV clinical trials and provide other services to biotech and pharmaceutical companies. “In terms of the potential for business development, the opportunities out there are greater than they’ve ever been before,” said Labcorp CEO Adam Schechter, noting that new opportunities in virtual and hybrid trials could be a growth area. Going forward, Labcorp plans to continue its core diagnostic testing business, as well as parts of its drug development business that focus on early-stage development and core laboratory work. Schechter will continue as CEO of Labcorp, but leadership of the new clinical development company will be announced at a later date. (Lombardo, Wall Street Journal28/7)