Corcoran et al v. CVS Health Corporation

Northern District of California, cand-4:2015-cv-03504

Exhibit C

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3 Exhibit C 3 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA OAKLAND DIVISION Christopher Corcoran, et al., Case No. I 5-cv-03504-YGR CLASS ACTION Plaintiffs, DECLARATION OF JOSEPH C. ZAVALISHIN CVS Pharmacy, Inc., Defendant I, Joseph C. Zavalishin, pursuant to 28 U.S.C. ç 1746, hereby affirm that I am over l8 years of age and competent to make the following Declaration. Personal Background 1. I am currently the Senior Vice President, Network Relations for OptumRx, Inc. ("Optum"). Optum, a subsidiary of UnitedHealth Group and affiliate of UnitedHealthcare Services, Inc., is a leading pharmacy benefit manager ("PBM") in the United States. I have held this position since February 2016. I lead the department responsible for provider and payer- facing relationships with Optum's business partners, including its network pharmacies. In my department, I oversee approxim ately 40 Optum employees. 2. Prior to becoming a Senior Vice President at Optum, I was the Executive Vice President of Strategic Contracting & Payer Relations at AxelaCare Health Solutions ("AlexaCare") from January 2014-February 2016. AxelaCare is a leading provider of home infusion solutions, which Optum acquired in late 2015. In that role, I had responsibility for, among other things, setting strategy and contracting with suppliers, accountable care organizations, pharmaceutical manufacturers, and health systems, as well as other related provider- partnership opportunities. 3. Prior to joining AxelaCare, I worked for Walgreens for approximately four and one-half years, initially as Vice President, Managed Care Contracting (June 2009-January 2013), and then as Vice President, Contracts & Pricing Development (January 2013-December 2013). In that position, I was responsible for negotiating Walgreens' contracts with PBMs and health plans in order to participate in their phannacy networks. DATE REPORTER Plånêt Dtpos, LLC 3 4. FromFebruary2004-May2009,lworkedforAetna. IjoinedAetnaasHeadofPlanning& Business Strategy, Medical Products, in which I built a new business unit responsible for business development, setting strategic direction, and leading mergers and acquisitions across multiple products. In October 2006,1became Vice President, Pharmacy Networks, and assumed responsibility for three operations: provider infrastructure, provider relations and contracting, and quality management. During my tenure, Aetna, one of the largest health insurance companies in the United States, operated in-house PBM services to administer the prescription-drug component of Aetna-sponsored health plans, and I was the Vice President in charge of the PBM part of the company. In that position, I oversaw a team of approximately 55 employees. 5. Collectively, I have over l5 years of experience working in the pharmacy and PBM industries. This experience includes but is not limited to: negotiating contracts and managing relationship with network pharmacies, managing pharmacy audit functions, and relationships with both providers of pharmacy related services and the payer community. The Aetna/CVS National Pharmacv Services Agreement 6. In my capacity as Vice President, Pharmacy Networks at Aetna, I negotiated and signed a new national agreement with CVS Pharmacy, Inc. ("CVS")-the National Pharmacy Services Agreement (Jan. 15,2009) between CVS and Aetna Health Management, LLC (the "Agreement"). The Agreement set forth the general terms and conditions governing CVS's relationship with Aetna. 7. CVS and Aetna began negotiating the Agreement as early as 2008. The negotiations involved multiple individuals from both organizaTions. I recall at least Beth Cuman (Director, Network Performance & Evaluation), Alan Maesaka, (in-house counsel) and Erin Schlitt (in-house counsel) participating on behalf of Aetna, and Elizabeth Wingate, Sharon Edmunds, and Tina Egan participating on behalf of CVS. 8. During our negotiations, I learned that CVS was launching a generic drug membership program called Health Savings Pass ("HSP") which would offer members a set price-point on a specified list of generic medications. The membership-program modelwas used at the time by several pharmacies to make generic drugs available to price-sensitive shoppers (e.g., Walgreens's Prescription Savings Club). A. S 1.54 - "Usual and Customary Retail Price" 9. My team and I were aware that CVS did not submit its HSP price as its usual and customary ("U&C") price on claims for Aetna insureds. First, I had a general awareness that prices charged by pharmacies like CVS and Walgreens in their membership programs were not being submitted as the pharmacy's U&C price. Second, CVS advised me of this fact in writing. 10. Specifically, during our negotiations with CVS, on or about December 15, 2008, I received an email from CVS's Sharon Edmunds describing HSP and attaching marketing materials for the program, including a sample membership card and the enrollment form listing the program's terms and conditions. At the time, Ms. Edmunds was Aetna's day-to-day contact 2 3 for our relationship with CVS. In her email, Ms. Edmunds advised that HSP "does not constitute [CVS's] Usual and Customary Pricing." The email and attachments are appended as Exhibit A. 1 l. I did not find CVS's position-that the HSP program price was not CVS's U&C price- surprising or remarkable. By the time CVS had launched HSP, other pharmacies' membership programs, such as the Walgreens program, were available in the marketplace. I fo tne best of my recollection, Aetna did not require those other pharmacies to submit their ' program prices as U&C on Aetna claims eitherJ 12. I agreed with CVS that under our Agreement, CVS did not need to submit the HSP program price as its U&C price.l 13. Specifically, the Agreement defined "IJsual and Customary Retail Price" as: "The cash price less all applicable customer discounts which Pharmacy usually charges customers for providing pharmaceutical services." Agreement $ 1.54. First, because HSP required enrollment and charged a fee, the HSP price was not CVS's "cash price," meaning the retail price CVS would charge ordinary customers without a form of prescription benefit (e.g., insurance, a cash discount card, or a membership program). Second, the HSP program price was not an "applicable customer discount," as we understood that phrase. HSP benefits were available to enrollees in CVS's program, not to all CVS customers without a form of prescription benefit. B. S 4.1.4 - "Pharmacy Obligation to Submit Claims" 14. The Agreement that I negotiated with CVS made explicit reference to the HSP program. It did so in Section 4.1 .1, which states in relevant part: Pharmacy shall process and adjudicate all claims for Pharmacy Services and is not obligated under this Agreement to process claims under the CVS Health Savings Pass Program. Agreement $ 4.1.1. I recall this provision in particular being the subject of negotiation in late 2008learly 2009. 15. In October 2008, Aetna's then-current draft of the Agreement proposed language in Section 4.1 .l that would have required CVS to "process and adjudicate all claims on-line, regardless of Pharmacy's own internal discount or reduced price programs.",Se¿ Draft Contract Sent by J. Zavalishin to E. Wingate (Oct. 20, 2008), at 13 [CVSC-0271054-0271143]. This provision was an attempt to ensure that Aetna would have visibility, for clinical purposes, into all prescriptions filled by beneficiaries of Aetna health plans. I This position was not different from Optum's position: CVS was not required under its agreements with Optum to report its HSP program price as its U&C price.,See Declaration of Michael D. Reichardt (Nov. 20, 201 6). J 3 16. I recall CVS asking Aetna to modify the proposed language of Section 4.1.1 to make clear that prescriptions purchased under CVS's HSP program would be exenapt'from the claim- submission requirement, in the event an Aetna insured had joined HSP and chose to fill a prescription under the program instead of through his or her insurance benefit. Although there was interest in seeing those claims, I understood CVS to have operational barriers that prevented them from submitting those claims to Aetna. Accordingly, we agreed to modify Section 4.1.1 to exclude HSP purchases from those claims required to be submitted to Aetna under the Agreement. Executed this 22nd day of Febr uary, 20 17, in Sch aumburg, Ill inois. Joseph C. Zavalishin 4 3 Y llqlqxf, 3 From: Edmunds, Sharon Sent: lllon 1211512OO8 4:12 PM (GMT-05:00) To: Zavalishin, Joseph C Cc: Bcc: Subject: FW: CVS Health Savings Pass Program - template for summary of program Attachments: 06839RXS08_.WallboardHSP.PDF; HSP_CardBlue_v5.pdf; CVS022 I 4_HSPBrochure*final.pdf Joe, enclosed is the material/ info we discussed on health savings pass From: Egan, Tina L. SenE Friday, December t2,2008 4:56 PM To: Wingate, Elizabeth S. Subject FW: CVS Health Savings Pass Prcgram - template for summary of program my template tbr explaining the progrâm --___ DRAFT -__ Thank you for giving CVS/pharmacy the opportunity to review with you the new CVS Health Savings Pass Proppam that has recently been iaunchcd in our markets across the countly. CVS is ilrtroducin¡¡ this program to combat the generic cliscount programs that have entered the Corcoran - CONFIDENTIAL cvsc-0397702 3 nr¿uket place over the last 2 years. Additionally, giten the economic changes that have taken place ovcr the last several rnonlhs, we feel that this is the right time to provide some additional prescription savings to the many cash strapped individuals and families around the country. \l Because CVS has a strict policy against price matching, we needecl to develop a program that I ¡otn provides valuc to compete against the discount pricing already in the markct place and provides the economic plan paramcters tllat make the program sustainable lbr CVS. CVS' program is very different from the cliscount pricing TVal-Mart ¿rnd others have introduced and therefore it does not constitute Usu¿rl ancl Customary pricing for our Medicaid clients. Attached are the materials fbr the progrâm. This program is being markcted to CVS' custorners. There is an enrollment pl'ocess. Our custorner tells us whether she wants to join the program. It is an "opt in" prograln, and CVS does not automatically enroll anyone into the prog¡am. There is a $10 per person enrollment feo per year. The amount ofthe enrollment fee r,vas careftilly choser¡ and plays a key role in the economic sustainability of the program for CVS. If a CVS customer decides to enroll in the CVS program, and pays the enrollment fee, she can typically receive up to a 90 clay quantity of a prescribecl drug (from a list of approximately 400+ generic prescription drugs that CVS will ofTer) tbr $9.99. A CVS customer who has enrolled in the program and paid her enrollment fee ca'n also get a l0% savings (up to $10):for medical services provided at our Minute Clinic, if she pays cash for the Minute Clinic service. No vouchers or il-store coupons are be provided. CVS pharmacists are not permitted to waive the enrollment fee. Should you have ftirther questions, please contact me directly Tina L. Egan, J.D. Vice President - HealthCare Regulatory ÜVS CARËMARK CORPORAiIOI{ olfice phone - 401 .770.4865 lax - 401.652.1218 mobile phone - 401.480.8937 This èùÈil ¡s cotlÍidêilt¡al and inlonded foi lhe Ì)aneci rec¡pi€nt(s) ônly. lf you rccéivè it iti eîoL p¡ëase nÒtify sendèt and de!êtè lhë çommLtnicati0n. Thank you. Corcoran - CONFIDENTIAL cvsc-0397703 3 Corcoran - CONFIDENTIAL cvsc-0397704 3 introducinç the nËw ffiWffi ffiemiltfu Sæwñ$rffis Pmms slgn up anC save! cvsc-0397705 3 tondcrCorls 2624A utN 00d336 PCN HEÂLTHÞASS Grcup Numbêr GVSRX f'ler¡rber Narns JANE DOE MêmberlD XffiOoOOoCOOoû EïfectiveDale 00/û8/080û This is not insurance i:,.:!:rl.i3 l.j:Ë: jr:¿rìi:-; 1 _ --!,,-, r.1-.. 1 ..: ' 'i.ii.;.n iieÍ il's:\ {,.>€i i. i:: o Ø o o (,) {{ (o o o) 3 L¡ìpnri ¡ùuf !ltur h," r iti-rfn ! tluf rr':r*tirìFì, r ì tLiLiut t, o--^,,--^^, Ëil1úllti¡çt¡t tifiìi ¡iiìär! ¡,f;rjijìr iilliiil L¡¡¡ ¡lôme Stt t l¡ l¡riìi ¡i;t iil.l. S'j11. Zip iôC¿ rdLf ur Dr'L ì i!Ìr!'ìr' u-ri.1uJil ïùl3f ¡oi,rl lrr¿ri itirli,:ri¡ij' 'i,¡ pii;ridìr:r¡ voar ulrii idiJrÊss, ït'iì fta'/ rtirÌvt irìiùnìáiiûn ü¡ùJi Llrtl lii0¡Jr¡ñ;j¡¡i ntriri síìri{rits ltr¡8iiii í"rra [VSl¡:]hormåûf" tfid ]'¿linL¡Îefilinic]: ffitf$/þr*ærffiery" Faymefit ÜptiCnS $10 annuar enrorrr;¡enr, Heailth $awfrmgs Pass ile r Ðílrson. Piea¡e chcase,vrrirr pieTai'red ilaymsnï r,rpïûn: llvøslit flr¡s! iìt. -. r .i ^: e .,¿ \r-3 r, l,:,,-1. rjpLl. enrolirn*nt form .{1iild1â iniii¡l i:: |ì 'i'r ?I]\ i I i::lì .j iil 'l 3içn;:iri;t - 'i¡r;r siü¡irl::;e i:i'¡i:; llYS,'i;h;rr¡:ril¡;i'o' ilrÍilì:$siûn tar aidlrñìirtÌî¿llT r-hiti¡t yoirr r.:itrliL uaC tìi: qLirlí.:¿il: f¡: c¿,;h ¿¡riiiai biìlitig puiiorJ. t as h ianr; it t: iccl 0 iì iY al ûVt4rhil ir i'iiit)¡r:i s k-rrrì Ì ti"¡tti{ n'ìa{ie ¡rayairie ti: l\i5lt,'irârrre-;yt' iiftiijl'a i¡iii:i iri:if ûi rl] ai !ì0fe) nL -.-,.-_ ^ ^:-r T.-.--;1.--- ^ *a l.-Í^ ^¿: ^ .-.^^ .- i-ì täf I í läui5 [ i-t lt t.]iltr i ìsÍ ì L ¡i I ut í f taLt{-irI ì il;. anri ii¡¿i-"ii r+ar'¡:iirrrÉtiri c,r'ir i:ì -i-ûi6-S$fi-i29i,!d. l1li)¡ìti.lc! rrir:ù: $iû.i]0 t:Þni¿ål fêÈ, Fer ÞgtEgÊ -l ¿,,-i,: \¿r.'.¿-.!r, iist {;ôn,Jôr rûdeì 2,i2ii-i: iìii:: jti4Jlti i Memb¡r t0: xxx 0güt00üttú ICN: llr\rïHli\lis; i,er!iÞ ì.¡itÉr'r nrriilÈ \rlilr i!rllFiÊÌe Þdd.ess tJnrj,1Ntâb.'i' !r(tle tt'oLr¡ iü: CliSl'lìl Froces¡ ùirrâllniâ¡i:ÈÈ,¡Éirìp ¡lDIj,jr-li.jûr-l-U"JUI]-ti4. toJlÊrlt the $ì tì s0rôiimenl ies äs iniiù¿ied. SubrTrissjorr of the ¿bor¡e liiDû eiirc¡lls thÉ cusicmer irì fhÊ o j'rgr"ìfir. P raeas l:ì, ilt.r,'::::Ìii{ Íf"^:ir't:¡Ír 1r}í:1: ail!Ìime.. Ø o o (¡t @ \¡ { o \¡ 3 dcur c*sts, Læçrysrsd. .,Y*ur nf;eds, Grversd. Vlhether vcu have linrited pi€sclipiiûu insurarrte cr no 'vïilh yûur i-iealih Såvings Pass, you cän get prsscripTic¡n ctvfiage ai all, lhe CVSiphaimary'" ilôalTh Sâ\rifigs pass is inedicaticns and treatmênts forl ie¡Ê:3 lìel] si',9 T,cnc\' -:he e:sy r.ra;r, ' Ali*tgy ic:.1 o Mei-ital Heaitii iÌ's l¡i at: ii:sur¿iilc+ pl¿n, itul a ptesciiËiian sauirrgs pass 'iirât.-:iìû,.r/s !ûu tû sarie on il'le r.rreciicäliûus }iou anr:i trour " Adhritis & PaÌn * Sti,n tondiiions 12f;rr r,Þ:Tr Ðir ¡r 'r-., | ¡o¡-ii,¡ 1l^'¡,- irli 4i ¡/ti r:,tâlliiô rG " Aslhna " Ti¡yroid tulditir:ns irisiile selçcr û\/Si i:hai'mati'ñ sili"es. * thclesleiol ó Yiru.le$ lr,;,:li¡i url is e¡sr,:nl rúsls rnl'y $iCr anri;aliy,0er tetsûir. ¡ ûiabgles ' Vitamins & \1r,¡ rân sÌiln rp i¡da'l anii staft se!ìnE imrnedi¿iîÊiy. " Fung¿l lriieclisns t'lutriÍional Health j-ieie 's hr,¡; .JrLr úan s¡,yr ú,'¡in tcur Hoallh Savinos ljasst e ljn jÏ g_;.!g lor a !lr_j-,_iarr o Gasirotnfustìnal Heallh ' 'vVom¿n's ilealih St,il¡:l;v r:f nvar tlary " Glaui:oma & Eye Care,Ând mcre 4it-l çereric 6rescriplio.,rs " {see iisli ¡'q¡:p rnr¡nl¡¡ì¿, lirl. i lî:o ofi at i'"'ìiiluteCliriiû1' r:t i an'1 i-egular pricec{ " r-leariHearrh 6 louoiìiri.ìiuììu,,,,o1 hnällh sr:ruicä tir" s[i'eiininß. Bl¡cii Pressuia cr¡. onlinej " Saïc âÌ unú ili ilil' íriiiû Ttûfi *,3fìil tV5/phar'macy¿' t^-.^:l ^,-,. i.- i .lì!rÍL i¡, I l.ll ' rl ùl! lÈ. t *ï emim[Jt* ÊsiDa stl¿c; s;orE; cltnic ffiW plræntæy' Ëasy, Åccessible. ÀtËardable, 'vïe'rc doing what we can to makE healtil iare a litrie easier and nrore afÍordairle for busy peopte lil,;e you. '{rith tha tVSlphannacyô Healih SavÌn$s Pass, lrcu;a,i save 1û9io at l,,linutetlinrc@ on any reguiar ¡:riceci health suwi¿¿ or screenìng." 0ur boaid-ceñifieci practitiorrers are ri'ainsd io #iâgir¡:se and ii€ãi commûn Íamiiy iii:less*s as 'ilell as glve vaicinaîions and læalih sci"eenirgs. Tlrls ¡ir*gr*nn is ru$T h*alth insurance.,{;qi0 gei' Der$cn rìfirlltïrent fÊ"" is r3Ê! ts{ii ànnu¿lly. Ycu mây rreßiÈl ' lJo êgp{llilirnenr necássa[r ';':ur inrnrbcrririp r/iihiî 3û rlây! fron ruciìilli of:,rr'lr mentliersliifl. tpen 7 days a'lee<, incluCirg er'èr.in,ls Êard âìlii itìâiÊr¡.ìir;, frir a iirli refryrc. 'lniri where prnhibileti bv la',1. Prices m¿,r r¡a¡i iil riarhin rtaies. $9.sS ÊriciiìS bäsÊc r)n r0m.n0nlv ' L4cs¡ serr¡ices siaÍing at $5$ o Freaiíjì'ihÈd rin"cer':. Lisl iiì sLihjúril li; char:ge \¡liÌhílut n.ilite. iûi' r:ômrjiûic tÌtiiis nfid ctnf¡ijirlns, rì$e slûr¿ ftr íif:ta¡¡s. ' U0 ì0;lìl il pÈr ûe$arn, per ris¡t. ful¡n¡ltetllirìild. cjier:rlinl ùlt a'.'i:'iallle ii Fhr¡Ja. 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