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December 10, 2019

CVS Caremark Targets Pharmacies With New "Aberrant Quantitates and Volume" Contract Amendment

On January 1, 2020, CVS Caremark will begin enforcing a new contractual provision designed to ensure its independent network pharmacies do not dispense more than 25 percent of products that are on Caremark’s “Aberrant Product List” by claims or dollars—as determined solely by Caremark.

The restrictions are intended to curb “dispensing aberrant quantities” or “high volumes” within a therapeutic category. The medications contained on the list are extensive and include numerous common medications. Some of the medications appear to be on the list solely because of their high profit margin for the pharmacy. To enforce the new provision, among other tactics, Caremark will perform monthly monitoring of its network pharmacies. If a pharmacy breaches the “aberrant product” threshold, it will receive a cease-and-desist notice. Additional violations by the pharmacy will subject it to network termination and chargebacks on claims.

The contractual amendment may have a severe impact on your pharmacy business, including your relationships with patients and providers. The Barclay Damon team has successfully represented pharmacies that have had their dispensing practices come under siege based on arbitrary and unilateral restrictions imposed by PBMs that are unrelated to patient care.

If you have any questions regarding the content of this blog post, please contact Linda Clark, health care controversies team leader, at lclark@barclaydamon.com; Brad Gallagher, counsel, at bgallagher@barclaydamon.com; Brenda Baddam, associate, at bbaddam@barclaydamon.com; or another member of the firm’s health care controversies team.

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