It happened in Ohio, New York, Iowa, Arkansas, New Jersey and possibly other states. Pharmacy middleman CVS Caremark suddenly cut the reimbursements it paid community pharmacies for drugs, some of them far below pharmacists’ costs for potentially lifesaving medications.

Each of the cuts happened late last year or early this year — all within a few months of when CVS Health announced a merger with health insurer Aetna.

In a Columbus Dispatch review of data collected from 40 pharmacies, the numbers back up what lawmakers and critics said happened in the fourth quarter of 2017: CVS Caremark sharply reduced payments to pharmacies.

In the first quarter of 2017, CVS Caremark received $370,000 in taxpayer dollars from those transactions. In the fourth quarter of the same year, CVS Caremark’s portion was $522,000, according to the data. The data represent less than 1 percent of the $3 billion Medicaid paid for prescriptions in 2017. CVS Caremark handles the prescriptions for four of the state’s five managed care plans.

CVS Health, parent company of both CVS Caremark and CVS Pharmacy, reported a net revenue of $34.2 billion in the fourth quarter of 2017, according to its website. That is a $3 billion increase compared to the fourth quarter of 2016.

Timing questioned

Some pharmacists question the timing of the reimbursement reductions and say they think it was no coincidence. They question whether CVS Caremark used that spending reduction to help raise $70 billion to merge with Aetna and create a health conglomerate that would include CVS Caremark, the nation’s No. 2 pharmacy-benefit manager; Aetna, the No. 3 health insurer; and CVS Pharmacy, the nation’s largest retail pharmacy chain.

“Dramatically, within days [of the merger announcement], reimbursements for many mental health generics dropped through the floor; below anyone’s ability to buy the product and provide it to the patient,” New York Assemblyman John T. McDonald III said in a legislative hearing this month.

CVS officials say emphatically that there was no relationship between the reimbursement cuts and the proposed merger.

“That’s absolutely not true,” Mike DeAngelis, CVS senior director of corporate communication, said Tuesday when asked about questions raised by some pharmacists and lawmakers.

Last fall, CVS Caremark cut so deeply the reimbursements for Suboxone, an important drug in the fight against Ohio’s opioid epidemic, that some pharmacists said they were forced to stop stocking it. The Ohio Department of Medicaid intervened with CVS officials, and the company quickly increased reimbursements.

Ohio Medicaid Director Barbara Sears on Wednesday said that along with Suboxone, her department received complaints about big cuts in reimbursements for hundreds of other drugs.

At the same time, CVS was sending letters to pharmacies citing their likely financial woes stemming from declining reimbursements and offering to buy out its retail competitors.

Complaints dismissed

Complaints also came to the Ohio Department of Insurance, which provides some oversight of the actions of pharmacy benefit managers — companies that negotiate prices with drug companies, help decide which medications are covered by health insurance plans and set reimbursement rates to pharmacies.

The department received 40 complaints about CVS Caremark from independent and large-chain pharmacists in 2017, according to state records.

Of those, 35 were filed in the fourth quarter. In all but two instances, the state sided with CVS Caremark in the dispute.

Department of Insurance officials say they are enforcing the law as written, and the statute doesn’t allow them to address pharmacy benefit manager reimbursements.

“Our authority with respect to PBMs is very narrow, and we cannot take action if there is no violation of the law,” said Chris Brock, spokesman for the insurance department.

In two instances, the complaints were referred to the Ohio Department of Medicaid.

“CVS Caremark just seems to make up their own price,” said Joel Wolfe, a pharmacist for Dave’s Pharmacy in Cleveland, in his complaint. “When you call CVS Caremark … no one will tell you what is going on.”

One of Wolfe’s complaints was for the generic version of Suboxone.

“On 10/30/2017 we were paid $18.88. On 9/30/2017 we were paid $23.50 and on 10/31/2017 were paid $5.09,” Wolfe wrote.

Mimi Hart, owner of Hart Pharmacy in Cincinnati, said CVS Caremark drastically cut the price of the generic for Antivert, an antihistamine used to treat motion sickness and dizziness. Hart said CVS Caremark paid her 54 cents per pill, when the cheapest she should find it from a wholesaler or manufacturer was 95 cents.

Other pharmacies complained of similarly large price swings for drugs that treat incontinence, seizures, ulcers and mental health.

“Wake up, legislators,” said Rick Marlin, a pharmacist for 46 years and director of pharmacy for Allen’s Pharmacy in Youngstown. “PBMs are doing whatever they want, whenever they want.”

CVS Caremark’s response to pharmacists’ complaints often was that the drug could be purchased at the lower price from drug wholesalers McKesson or Cardinal Health. The state accepted that argument when telling pharmacists why they agreed with CVS Caremark.

“What the state doesn’t seem to understand is that there are three major wholesalers, and normally a pharmacy only contracts with one of those three,” Marlin said. “So you can’t buy from the other ones, and we check with our colleagues that do have contracts with those other wholesales and they say there’s no way I can buy it at that price either.”

Contact Marty Schladen at mschladen@dispatch.com