Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Judiciary Committee report claims CVS Health suppressed competition in the PBM space, (Jan 23, 2026)

By Donielle Tigay Stutland, J.D.

The staff report details that CVS Health engaged in a pattern of anticompetitive behavior to protect its dominance from hub pharmacies.

The House Judiciary Committee released an interim staff report titled "When CVS Writes the Rules: How CVS Protects Itself From Innovation and Competition," detailing how CVS Health in its role as a pharmacy benefit manager (PBM) is using its market power to suppress competition. Specifically, the report outlined 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.

Background. The report noted that in recent decades, there has been significant concentration and vertical integration in the PBM market. As of 2003, the top four PBMs controlled 68 percent of the market. By 2024, the three largest PBMs controlled nearly 80 percent of the market for PBM services: CVS Caremark (27 percent), Cigna/Express Scripts (30 percent), and UnitedHealth/OptumRx (23 percent). Moreover, vertical integration also dominates, in the case of CVS Health, while the PBM and retail pharmacy chain are technically separate entities, like in the case of CVS Caremark and CVS Pharmacies, they both operate under the same parent company, CVS Health, and report to the same CEO, David Joyner.

Digital hub pharmacies, or “hubs” for short, were noted as the primary companies innovating in the pharmacy as a service industry in the report. Emerging "hub pharmacies" including Blink Rx, Phil, Nimble, Carepoint and ASPN, provide "pharmacy as a service," enhancing price transparency, access, and choice by streamlining benefit verification, prior authorizations, and fulfillment. Hubs partner with independent pharmacies, and could potentially disrupt PBM-owned models.

In September 2024, the Subcommittee on the Administrative State, Regulatory Reform, and Antitrust held a hearing to examine the role of PBMs in the healthcare industry. Following witness testimony that PBMs likely do have the market power to stifle innovation, and in particular, one witness replying that this type of conduct “probably happens,” on December 12, 2024, the Committee and Subcommittee sent CVS Health a letter to examine “whether CVS Caremark is engaged in activities that harm competition, stifle innovation, and may violate the antitrust laws.” The Committee’s request for information was limited to CVS Caremark’s actions to stifle competition because independent pharmacies and hubs only reported such conduct by CVS Caremark and not any other PBM.

Investigation. In response to the Committee’s and Subcommittee’s request, CVS Health provided a briefing outlining CVS Health’s position on independent pharmacies working with hubs and CVS Health’s attempts to eliminate alleged fraud from its network. CVS Health produced over 2,200 documents responsive to the Committee’s oversight. Among other documents, CVS Health produced nonpublic strategic analyses, audit records, provider manuals, cease-and-desist letters, external communications between independent pharmacies and CVS Health employees, and internal communications among CVS Health employees.

In particular, CVS Health produced draft and final versions of its 2020, 2022, and 2024 provider manuals, which list the rules that an independent pharmacy must follow to be a part of CVS Caremark’s pharmacy network. CVS Health also produced cease-and-desist letters demanding that independent pharmacies stop working with hubs because of alleged violations of the provider manual. The documents suggest that if the independent pharmacy refused to stop working with the hub pharmacies, it could face potential termination from CVS Caremark’s pharmacy network and id an independent pharmacy is terminated from CVS Caremark’s pharmacy network, it cannot dispense medications to patients whose insurance plan uses CVS Caremark’s PBM, approximately 30 percent of the insured population.

Key findings of report. Based on its investigation, the Committee reported that internal CVS Health documents show that CVS Health acted to stifle innovation and reduce competition from hub pharmacies. The documents revealed that CVS Health developed plans to establish its own suite of digital pharmacy services and then, instead of competing with hubs on the merits of their services, prevented independent pharmacies from using pharmacy services from hubs. To achieve this, CVS Health monitored the business relationships of independent pharmacies and hubs, modified its provider manual to create uncertainty for independent pharmacies working with hubs, used the modified provider manual as a pretext to audit independent pharmacies, and sent cease-and-desist letters to those independent pharmacies found to be working with hubs.

CVS Health used its position owning a PBM to access non-public information about how hubs work with independent pharmacies to potentially gain a competitive advantage. Specifically, CVS Health engaged in various activities to get more information about competitors. In one case, CVS Health attempted to track exactly “where the money is going” between an independent pharmacy and the hub pharmacy. CVS Health also investigated why an independent pharmacy appeared to be “engaging in HUB like activities, but [was] also handling all financials including collection of copayments.” In that case, CVS Health also wanted to “see if they are triaging out prescriptions vs. assigning their own prescription number and then transferring those out to individual pharmacies.” In another case, CVS Health investigated a pharmacy that “appear[ed] to be a HUB” but CVS Health was unable “to identify where the claims [were] migrating to.” Finally, CVS Health required at least one independent pharmacy to hand over its contracts between the independent pharmacy and hubs, including Phil and Blink.

CVS Health then began taking steps to eliminate the competitive threat that hubs posed by modifying the CVS Health provider manual, which details the rules that independent pharmacies must follow to serve CVS Caremark-covered patients (i.e., the 30 percent of insured Americans in the CVS Caremark PBM network), to prevent independent pharmacies from working with hub pharmacies. The changes prohibited independent pharmacies from working with hubs or operating hubs or submitting test claims to help patients understand which medications are covered and at what price. Moreover, CVS Health worked to explicitly prohibit independent pharmacies from working with rival hubs. Additionally, CVS Health made changes to its provider manual that prohibit independent pharmacies from integrating a hub pharmacy’s third-party software into its pharmacy management system.

The report also highlighted documents from CVS Heath that “suggest that CVS Health attempted to eliminate competition from rival hubs and force independent pharmacies toward its own products through its use of cease-and-desist letters.” In August 2022, CVS Health sent cease-and-desist letters to at least 40 pharmacies claiming that those pharmacies were in violation of the provider manual for working with rival hubs. The letters claimed that the independent pharmacy was “in violation of [the] provider agreement” for processing claims for a migraine medication while working with certain pharmacy hubs. The letters demanded that the independent pharmacy take steps to stop working with hubs including reversing all prescription claims for certain drugs. The Committee viewed this as CVS Health prohibiting independent pharmacies from using hubs to submit insurance claims or collect patient copays and demanded the independent pharmacy forgo reimbursement for medications already dispensed by reversing the insurance claim. CVS Health’s letters also threatened to terminate the independent pharmacy from the network for failure to comply with the demands.

In communications with the Committee, CVS justified its actions as fraud prevention. CVS Health claims to aggressively monitor fraud because the insurance companies and plan sponsors (i.e., employers that buy the health plans for their employees) that utilize CVS Caremark’s PBM service lose money when pharmaceutical manufacturers pay pharmacies and doctors to push high-cost medications with dubious clinical applicability. However, the report noted that CVS Health has not produced any evidence to support the claim that hubs are engaged in fraudulent activity.

Following Committee’s initiation of its investigation into CVS Health’s anticompetitive actions, CVS Health engaged in negotiations to enter into a commercial arrangement with one hub, Blink, which was viewed as a backtrack by CVS Health. CVS Health also distributed letters to at least 15 independent pharmacies, reversing its previous cease-and-desist letters and allowing the pharmacies to work with a hub it was in negotiations with.

The report concluded that it is possible that CVS Health’s conduct violated the antitrust laws. Although current antitrust law may address CVS Health's conduct with respect to hubs and innovative technologies, it was suggested that Congress consider legislative reforms to better address this emerging anticompetitive conduct in the pharmaceutical industry.

Companies: CVS Health

News: Antitrust