The House Judiciary Committee has released an interim staff report that examines the actions of CVS Health in the digital pharmacy sector. The report, titled "When CVS Writes the Rules: How CVS Protects Itself From Innovation and Competition," outlines concerns about how CVS Health has responded to emerging competition from online and hub pharmacies.
According to documents reviewed by the committee, CVS Health developed a strategy to increase its presence in the digital pharmacy market due to concerns about being outpaced by innovative companies. Instead of focusing solely on competing with these new entrants, CVS Health reportedly monitored rival hub pharmacies and scrutinized independent pharmacies that collaborated with them.
The committee's findings indicate that CVS Health took several steps after learning about the hub model. These included altering network rules to prevent independent pharmacies from partnering with hubs, using audits and cease-and-desist letters to restrict competitor access, and leveraging its pharmacy benefit manager (PBM) network to reduce competition.
In response to the committee's investigation, CVS Health reversed some of its actions and permitted independent pharmacies to work with one hub. The report notes that this conduct could potentially be in violation of antitrust laws. As stated by CVS Health's CEO: "another example of a large PBM not allowing the small guys to compete."
The emergence of hub pharmacy technology raises questions about whether current laws are sufficient to address such business practices. While existing antitrust statutes may cover some aspects of CVS Health's behavior regarding hubs and innovative technologies, Congress is considering possible legislative reforms aimed at addressing new forms of anticompetitive conduct within the pharmaceutical industry.
The full interim staff report and appendix are available for further review.
