Dive Brief:
CVS has agreed to pay Massachusetts’ Medicaid program $12.3 million to settle allegations that the company’s pharmacy benefit manager overcharged the state for prescription drugs.
The settlement was disclosed Thursday by the Massachusetts attorney general. It brings to a close a lawsuit the state filed in April accusing the pharmacy chain of offering lower drug prices to customers paying cash but still billing MassHealth higher rates, violating the state’s pricing regulations.
CVS has also agreed to review its prescription drug pricing for MassHealth every year to ensure it’s not overcharging the program.
Dive Insight:
In 1995, MassHealth adopted a drug pricing policy entitling the Medicaid program to the lowest prices for prescription drugs that pharmacies like CVS charge or accept from other payers.
Still, CVS failed to give MassHealth its best prices, especially for generic drugs, for years, according to the state’s lawsuit. Instead, the company contracted with a prescription savings company called ScriptSave to divvy out drug discount cards to consumers — resulting in them receiving lower prices than what CVS charged Massachusetts for its Medicaid members.
“When pharmacies overcharge MassHealth, they’re undermining the integrity of our public programs and leaving taxpayers to foot the bill,” Andrea Joy Campbell, the Massachusetts attorney general, said in a statement. “I am proud to announce this settlement, which will prevent future inaccurate price reporting and ensure MassHealth has the resources it needs to continue serving Massachusetts residents.”
Campbell was joined by the attorneys general of Connecticut, Indiana and Oklahoma in filing the lawsuit, which stemmed from a whistleblower complaint.
A CVS spokesperson said the company is “pleased to resolve” the matter with Massachusetts and plans to continue defending its practices against the other plaintiffs.
“The agreement is not an admission of liability or wrongdoing and was agreed upon to avoid the time and expense of further litigation with Massachusetts,” they said over email. “We’ll continue vigorously defending against the claims concerning CVS Pharmacy’s usual and customary pricing brought by remaining plaintiffs in the case.”
The $12 million settlement is barely a slap on the wrist for the diversified healthcare company, which brought in $373 billion in revenue and $4.6 billion in profit last year.
Still, its the latest in a series of recent fines. In August and July, CVS was ordered to pay a $290 million penalty and a $949 million penalty respectively for allegedly overcharging the U.S. government for prescription drugs. CVS is appealing both judgments.
