Hopkinton Drug, the town's only pharmacy, has filed a federal lawsuit alleging industry giant CVS Caremark is trying to damage its business so it can enter the local market.
The lawsuit, filed June 30, protests the decision by CVS to end an agreement that enabled Hopkinton Drug to fill prescriptions for customers whose pharmacy insurance benefits are administered through CVS Caremark.
CVS says it ended the agreement because of a licensing issue, and not to break into the Hopkinton market.
A federal judge last week approved a preliminary injunction that allows the 60-year-old independent operation on Main Street to continue serving CVS Caremark customers until the lawsuit is resolved. The ruling is critically important for the store because Caremark represents one-third of its pharmacy customers, according to Hopkinton Drug's lawyer.
The dispute began last month, when CVS notified the drug store it had ended its contract to provide Caremark services. The lawsuit, filed in US District Court in Boston, cited a CVS audit of Hopkinton Drug that found "unresolved discrepancies."
Although it serves local customers, the Hopkinton pharmacy also has earned a national reputation for selling compounded medications that focus on Lyme disease, mold disease, and other specific ailments, according to its lawyer, Lawrence Green.
In a statement, a spokeswoman for CVS Caremark said the audit found Hopkinton Drug had filled a "substantial number of prescriptions and dispensed drugs in states in which it was not licensed." As the CVS prescription benefit manager, Caremark is required to perform audits of pharmacies that participate in the network, according to Christine Cramer, a company spokeswoman.
Hopkinton Drug resolved the licensing issues once it learned of the problem, Green said. Its owner had not been aware that the store needed licenses to fill prescriptions for residents in other states, because the medications were ordered by licensed physicians, Green said. And Caremark knew the pharmacy was filling orders from other states, because it was covering the sales, he said.
Hopkinton Drug contends the dispute is about its status as an independent pharmacy, and the only drug store in the town.
Through its real estate arm, CVS has made several inquiries about buying the business, with the latest one in January, according to Green. The store, established in 1954, is owned by Dennis Katz. Katz declined to comment last week, and directed questions to his attorney.
Green said his client has no interest in selling the business, which was started by his father.
"We do stand behind that allegation," Green said. "CVS has been using Caremark as an instrument to advance their own gains here."
CVS, in its statement, disputed the accusation that the company is trying to use the dispute to enter the Hopkinton market. "Pharmacy network issues are handled exclusively'' by Caremark's pharmacy benefit management, or PBM, business, Cramer wrote. "CVS Caremark's retail pharmacy business does not play any role in the PBM termination decisions. Any suggestion otherwise by Hopkinton is entirely unfounded."
CVS Caremark is the nation's second largest retail pharmacy corporation, and operates more than 7,000 stores as well as a mail-order prescription service.
Until the case is resolved, under the injunction approved last week, Hopkinton Drug can continue to fill prescriptions for customers whose insurance benefits are administered through CVS Caremark, according to Green.
The store laid off four or five pharmacy employees following the CVS contract's termination, Green said, but the court's ruling should let it avoid any additional staff cutbacks. Before the preliminary injunction, he said, Hopkinton Drug had expected to lay off about half of its 48 employees.
Mary MacDonald can be reached at marymacdonald3@ aol.com.