O Say Can You (Pharma)cy? Can PBMs Dictate Where You Buy Your Drugs?
Doe v. CVS Pharmacy, Inc.
982 F.3d 1204 (9th Cir. 2020),
cert. granted, 2021 WL 2742790 (U.S. July 2, 2021).
On November 12, 2021 the Court dismissed this case, following the parties joint stipulation to dismiss the writ of certiorari.
Issue: Whether Section 504 of the Rehabilitation Act of 1973 — and by extension Section 1557 of the Patient Protection and Affordable Care Act, which incorporates the “enforcement mechanisms” of other federal antidiscrimination statutes — provides a disparate-impact cause of action for plaintiffs alleging disability discrimination.
In the midst of efforts in both the legislative and executive branches to address rising prescription drug prices, the Supreme Court has taken up a case regarding discrimination in access to and pricing for prescription drugs to treat people with disabilities.
This case involves a class of HIV-positive participants in an employer-offered prescription drug benefit plan. The plan’s pharmacy benefit manager (PBM), the company that administered the program, was CVS Pharmacy, Inc. (CVS). CVS considered specialty medications “in network” only when beneficiaries obtained them from CVS retail locations or through mail delivery. Doe v. CVS Pharm., Inc., 348 F. Supp. 3d 967, 977 (N.D. Cal. 2018). Purchasing medications out-of-network subjected participants to higher, often prohibitive, costs. The participants wished to purchase their prescription medications from pharmacists of their choice, i.e., pharmacists who knew their medical histories and could provide relevant advice. Id.
In 2018, the class sued their employers, CVS, and prescription drug providers, alleging that the policies of the pharmacy benefit program have a disproportionate negative impact on them because of their status as HIV-positive—a disability—and that the network restrictions denied them meaningful access to their prescription drug benefits. Doe, 982 F.3d at 1211-12 (9th Cir. 2020). They brought claims under the Rehabilitation Act (Section 504), the Affordable Care Act’s anti-discrimination provision (Section 1557), the Americans with Disabilities Act (ADA), and California’s Unruh Civil Rights Act. Id.
In December 2018, the federal district court for the Northern District of California dismissed all the enrollees’ claims. Doe v. CVS Pharm., Inc., 348 F. Supp. 3d 967, 986 (N.D. Cal. 2018). The district court held that the plaintiffs did not show that enrollees with HIV/AIDS are disparately impacted by the programs’ restrictions relative to other enrollees, as all enrollees were subject to the higher “out-of-network” costs, and that any disproportionate impact did not deny HIV/AIDS-positive enrollees meaningful access to program benefits. Id. at 982, 986–87. The district court’s ruling was then appealed to the U.S. Court of Appeals for the Ninth Circuit.
In December 2020, the court of appeals vacated the District Court’s decision as to the Section 504 and Section 1557 claims, while affirming its decision as to the ADA. Doe v. CVS Pharm., Inc., 982 F.3d 1204, 1215 (9th Cir. 2020). The Ninth Circuit held that the enrollees could bring a disparate impact claim under Section 504 and Section 1557 and that the enrollees adequately alleged a denial of meaningful access to the benefit. Id. at 1212.
The Ninth Circuit became the fourth circuit court to recognize disparate impact claims under Section 504, joining the Second, Seventh and Tenth Circuits. This case will resolve a circuit split between these circuits and the Sixth Circuit.
WHAT'S AT STAKE
If the Court rules that disparate impact claims are unavailable to plaintiffs under Section 504 and, by extension, Section 1557, plaintiffs will have to allege intent to discriminate in order to state a claim, significantly weakening the “meaningful access” standard. This would make it much more difficult to bring claims of discrimination under these laws.
The rights to be free from discrimination and to access affordable prescription drugs are particularly important to older adults. Nearly nine in ten adults 65 and older currently take prescription medication. Prescription drug prices have risen at a much faster rate than the rate of inflation, and older adults simply cannot afford the skyrocketing costs. One in three Americans do not take their prescriptions as prescribed because they cannot afford the medicine.
People living with chronic conditions and disabilities are especially vulnerable to these increased costs. Older adults with disabilities are also three times as likely to have income below the federal poverty level, compared to older adults without disabilities. Ending discrimination in drug access and pricing will promote better health outcomes for older adults with low income.
Susan Ann Silverstein