New Report Reveals CVS Health Targeted Competitors and Independent Pharmacies

WASHINGTON, D.C. - Today, the House Judiciary Committee released an interim staff report titled "When CVS Writes the Rules: How CVS Protects Itself From Innovation and Competition." The report reveals how CVS Health is stifling innovation by threatening independent pharmacies that work with potential competitors.

According to documents produced to the Committee, CVS Health developed a plan to invest heavily in the digital pharmacy sector. CVS Health saw online pharmacy services as the future and feared falling behind if it did not develop its own hub pharmacy to compete against innovative companies. After surveilling rival hubs and investigating independent pharmacies that work with those hubs, instead of vigorously competing, CVS Health took action to foreclose competitor access to independent pharmacies.

Nonpublic documents produced to the Committee show that CVS Health:

• Learned how the hub model operated and then changed its network rules to stop independent pharmacies from working with hubs;
• Used audits and cease-and-desist letters against independent pharmacies to foreclose competitor access and restrict options for independent pharmacies; and
• Leveraged its PBM pharmacy network to eliminate competition.

Faced with the Committee's investigation, CVS Health backed down and allowed independent pharmacies to work with one hub. It is possible that CVS Health's conduct violated the antitrust laws. CVS Health's own CEO characterized his company's actions best by writing: "another example of a large PBM not allowing the small guys to compete."

The rise of hub pharmacy technology presents new questions about the sufficiency of existing laws. Although current antitrust law may address CVS Health's conduct with respect to hubs and innovative technologies, Congress may consider legislative reforms to better address this emerging anticompetitive conduct in the pharmaceutical industry.

Read the full interim staff report here.

Read the full appendix here.