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CVS Caremark Settles With Feds Over Drug Pricing Allegations

CVS pharmacy is paying big bucks in order to settle claims that the company fraudulently reported prescription drug costs in order to increase its profits.

According to The US Department of Justice, Rhode Island-based pharmacy CVS Caremark Corp. has agreed to pay $5.25 million to settle allegations that it reported false information on prescription drug prices to the government’s Medicare program.

Federal investigators said CVS’ RxAmerica subsidiary reported false information about the prices of generic prescription drugs in 2007 and 2008. The Centers for Medicare and Medicaid Services used this information in a website called Plan Finder, which seniors could use to estimate their out-of-pocket drug expenses. But Justice Department officials said the actual drug prices offered by the company were higher than those submitted for use on the website.

RxAmerica and the Part D Medicare program, subsidiaries of Longs Drug Stores, acquired by CVS Caremark Stores in 2008, were at the center of investigation by the government which alleged that incorrect drug prices were given to the Centers for Medicare and Medicaid Services for certain generic drugs. Thus RxAmerica received Medicare Part D payments for claims for the covered drugs at prices that, in some cases, were significantly higher than the pricing data RxAmerica submitted to CMS for use on Plan Finder.

“Those navigating our Medicare system deserve accurate information so they can make informed choices and obtain the benefits to which they are entitled,” said Loretta Lynch, U.S. attorney for the Eastern District of New York.

The company said in a statement Monday that it cooperated fully in the matter and consistently submitted accurate pricing data to CMS in 2009 and 2010. It said that RxAmerica, which provides prescription drug benefits to Medicare beneficiaries pursuant to a prescription drug plan, no longer offers the related Medicare Part D plans as of 2012.

Medicare provides health insurance coverage to about 48 million senior and disabled Americans. Since 2006, the federal plan has included coverage for prescription drugs, though the actual plans are administered by private pharmacy benefit managers like CVS and Express Scripts.

The civil settlement resolves allegations made in two separate whistle-blower lawsuits against Woonsocket, R.I.-based CVS in 2008 and 2009.

CVS said it agreed to the settlement to avoid protracted and expensive litigation. It noted that the period in question came before it acquired RxAmerica through its takeover of Longs Drugs Stores.

CVS said that this would not affect its 2012 earnings. In January, CVS agreed to pay $5 million to resolve similar allegations filed by the Federal Trade Commission.



Principal & Founder
This article was written by Mark Sadaka, a seasoned trial lawyer in nationally significant cases. He fearlessly champions clients impacted by fatal or severe injuries caused by others or corporations. Renowned for his expertise in complex litigation, he's featured in books, sought after by media for interviews, and a highly sought speaker. Notably, he exclusively represents individuals facing life-changing injuries or substantial financial losses.

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