CVS Pharmacy has reached a $12.25 million settlement with the Massachusetts Attorney General’s Office over allegations that it failed to offer the state’s Medicaid program its lowest drug prices, as is required by state law, the attorney general’s office announced Tuesday.
CVS Pharmacy said in a statement that it was pleased to have settled the lawsuit, but noted that the claims only involve Massachusetts’ unique regulations regarding charging MassHealth — the state’s Medicaid program — its lowest drug prices.
“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,” the statement reads. “We’ll continue vigorously defending against the claims concerning CVS Pharmacy’s usual and customary pricing brought by remaining plaintiffs in the case.”
The Massachusetts Attorney General’s Office, along with three other state attorneys general offices, began investigating the allegations after a whistleblower lawsuit was filed in a federal court in D.C., the attorney general’s office said in a press release. The three attorneys general offices filed a joint lawsuit against the pharmacy company in April.
The lawsuit alleged that CVS Pharmacy offered lower drug prices to cash-paying customers through a discount program administered by a company called ScriptSave, but evaded its responsibility to report and bill Medicaid programs the lower, discounted rates, the attorney general’s office said.
The pharmacy company is accused of contracting with ScriptSave to target former customers of CVS’s discount card program, Health Savings Pass and those who visited former Target pharmacies — which CVS had acquired — to join the discount program, the attorney general’s office said. As a result, MassHealth was often charged higher drug prices than these customers — even for generic drugs.
“When pharmacies overcharge MassHealth, they’re undermining the integrity of our public programs and leaving taxpayers to foot the bill,” Massachusetts Attorney General Andrea Campbell said in the release.
As part of the settlement, CVS Pharmacy agreed to adopt a yearly reconciliation process in which they review prescription drug pricing for MassHealth members to ensure that MassHealth is not overcharged in the future, the attorney general’s office said.
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