Last month, news broke that Cathedral Pharmacy, a retail fixture along Connecticut Avenue NW, was facing a murky future due to a contract dispute with its medication distributor CVS Caremark. In response, Ward 3 Councilmember Mary Cheh has requested that the city’s Attorney General investigate whether or not the dispute represents unfair trade practices and a violation of District antitrust law.
“From what I’ve seen with Cathedral Pharmacy, we must determine whether CVS is using its size and unique position as a pharmacy benefits manager to eliminate or disadvantage small and local businesses,” Cheh said.
The corporation said in late June that it would terminate the Cathedral Pharmacy’s contract after a recent audit showed that the pharmacy had received HIV medication under a city-run program without appropriate documentation. The company claimed that represented a breach in their agreement with the pharmacy. The owner of the pharmacy, Michael Madden, told the Washington Post that the termination would be the “death knell” for the business.
“CVS Caremark undertook its audit of Cathedral Pharmacy after receiving information from various sources and government agencies regarding certain pharmacies in the DC area, and potential inventory issues at those pharmacies,” said Christine K. Cramer, a spokesperson for the company, who said that Cheh had not contacted them before calling for the investigation. “We provided Cathedral with several opportunities to verify the source of certain products it had dispensed, but Cathedral acknowledged that it was not able to do so. We also offered to have an independent auditor check our findings, but Cathedral declined that offer.”
CVS Caremark’s unique business model — it sells medicine in its own stores while at the same time reimbursing rival pharmacies as a third-party administrator of prescription drug programs — is at the heart of investigations in several other jurisdictions. But the company denies that they are going after Cathedral Pharmacy specifically.
“CVS Caremark is not trying to harm Mr. Madden or his pharmacy, and any suggestion to the contrary is entirely unfounded,” Cramer said. “Cathedral Pharmacy will have an opportunity to seek reinstatement into our network once they have sufficiently addressed the inventory issues discovered in our audit.”
The Councilmember’s letter to Irv Nathan, sent last Wednesday, also raises “concerns regarding data-mining and the potential for abuse of that data” by CVS Caremark; Cramer called such allegations “off-base.”
Cheh’s request to the attorney general:
And, in full, CVS Caremark’s statement on Cheh’s request:
It is unfortunate that Councilmember Cheh issued her letter to the Attorney General without contacting CVS Caremark or inquiring as to the basis for Cathedral’s termination. CVS Caremark recently suspended Cathedral Pharmacy from our pharmacy network due to significant discrepancies that were found in an audit of Cathedral’s inventory practices. CVS Caremark is not trying to harm Mr. Madden or his pharmacy, and any suggestion to the contrary is entirely unfounded.
CVS Caremark undertook its audit of Cathedral Pharmacy after receiving information from various sources and government agencies regarding certain pharmacies in the DC area, and potential inventory issues at those pharmacies. We provided Cathedral with several opportunities to verify the source of certain products it had dispensed, but Cathedral acknowledged that it was not able to do so. We also offered to have an independent auditor check our findings, but Cathedral declined that offer.
The inability of a pharmacy to document the source of drugs that it dispenses to the public raises substantial concerns about patient safety. Without proper documentation as to the source of drugs that a pharmacy dispenses to the public, the pharmacy cannot prove among other things that it obtained the drugs from a government-approved source that complied with the legal requirements for the handling of the drug. Accordingly, as part of our ongoing commitment to ensuring patient safety and best practices in the delivery of pharmacy services in our networks, and consistent with our written policies and procedures when faced with issues of this nature and scope, we suspended Cathedral. CVS Caremark does not make such suspension decisions lightly, but must make such decisions where particular audit results raise concerns for the safety of patients or suggest fraudulent activities that harm our payer clients—as is the case here.
Cathedral Pharmacy will have an opportunity to seek reinstatement into our network once they have sufficiently addressed the inventory issues discovered in our audit. During the period of Cathedral’s suspension, we are committed to ensuring minimum disruption to the neighborhood residents who depend on us for service.
The Councilmember’s letter’s references to privacy concerns are also off-base. Indeed, not only do such issues have no application to the audit leading to Cathedral’s termination, but CVS Caremark places a high priority on protecting the privacy of its customers and plan participants. We use patient data internally for appropriate purposes and in accordance with applicable privacy laws. For example, we use such data to identify potential drug interactions; to improve compliance, adherence and disease management; and to notify patients about alternative treatments or therapies. In limited circumstances, we exchange aggregated, de-identified data with third parties to assist the health care community in understanding patient use of prescription medications with the goal of achieving better health outcomes.
