Illinois Attorney General Kwame Raoul's office investigated the relationship between CVS Caremark — and in particular its group purchasing organization Zinc Health Services — and later alleged it obscured rebates paid by drug manufacturers that should have been passed on to Illinois CMS, according to STAT.
Group purchasing organizations aggregate health providers' orders for medications or supplies to maximize buyers' purchasing power.
Raoul's office did not respond to a request for comment.
CVS Caremark denied any wrongdoing or civil or criminal liability in the settlement agreement.
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"Caremark denies each and every allegation of liability, wrongdoing and damages related in any way to the covered contract," the agreement said.
In an emailed statement, the PBM said it "values the ongoing nine-year PBM relationship with the state of Illinois.
As sometimes occurs in extended relationships, CVS Caremark and the state of Illinois recently had a disagreement about how some terminology within our contract should be interpreted. While we do not agree with the state’s position, we are thankful that the issue has been resolved cooperatively."
Zinc Health Services was founded by CVS Health in 2020.
In 2023, the Federal Trade Commission announced an inquiry into PBM practices, including charging fees and clawbacks to unaffiliated pharmacies; steering patients towards PBM-owned pharmacies; potentially unfair auditing of unaffiliated pharmacies; the use of complicated and opaque pharmacy reimbursement methods; and negotiating rebates and fees with drug manufacturers that may skew the formulary incentives and impact the costs of prescription drugs to payers and patients.
CVS Caremark pointed out in its statement that the state has recently renewed its contract with CVS Caremark, "and we look forward to continuing our work with the State for the benefit of its employees."
This story first appeared in Crain's Chicago Business.
