CVS recently won a lawsuit against John Lavin, a former executive, who sought to violate a non-compete clause by going to work at PillPack, Amazon’s pharmacy arm.
Lavin, a former senior vice president who looked over CVS Caremark’s retail pharmacy network, will not be able to work at PillPack for at least 18 months. The lawsuit shows a worry amongst pharmacies that Amazon will undercut their current pricing method of distributed drugs.
CVS currently rely on Pharmacy benefit managers (PBMs) who negotiate directly with insurance companies to determine a drug’s price. Through this negotiation process, drug manufacturers discount their process so that they can be on a PBM’s preferred drug list. CVS believes that Amazon seeks to go directly to insurance companies and cut out the role of PBMs.
“Given its robust infrastructure, operational capacity, and distribution reach, Amazon-PillPack is uniquely positioned to negotiate directly with payers (insurers) and displace CVS Caremark’s mail-based services,” CVS argued.
Lavin, with his years of experience at CVS has effectively accrued a network of clients, such as different insurers, that PillPack could then directly approach as it expands its operations. PillPack has already started pursuing the insurer Blue Cross Blue Shield.
“Most recently, Amazon-PillPack engaged in direct discussions with Blue Cross Blue Shield, a federation of 36 health insurance plans that cover more than 100 million Americans, to provide its members with prescription home delivery,” CVS’ motion reads.
Judge John J. McConnell ruled in favor of CVS, arguing that in his new role, Lavin would work with private Payers and public Payers, both of which are currently clients of CVS.