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Seven insurers sue CVS for allegedly inflating drug prices

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A new lawsuit — the second in the span of a year — alleges CVS overcharged health insurers for prescription drugs, pocketing billions of dollars. But CVS shot back, saying these allegations are “baseless” and “completely without merit,” in an emailed statement.

The plaintiffs — CareFirst of Maryland, Group Hospitalization and Medical Services, CareFirst BlueChoice, Blue Cross and Blue Shield of South Carolina, BlueChoice HealthPlan of South Carolina, Blue Cross and Blue Shield of Louisiana and HMO Louisiana — filed a lawsuit last week in the U.S. district court in Rhode Island. This is the second such lawsuit to be brought against CVS over the past year. Last May, six Blue Cross Blue Shield companies sued CVS over drug pricing.

Woonsocket, Rhode Island-based CVS intentionally engaged in a fraud scheme to overcharge insurers for prescription drugs by submitting claims at artificially inflated prices, the new lawsuit claims.

Through its Health Savings Pass Program, which was later replaced by the Value Prescription Savings Card Program, CVS offered hundreds of generic drugs at low, discounted prices. These programs served two purposes, the lawsuit alleges. First, the programs were intended to help CVS compete for cash customers. The second was to hide the true prices of the drugs from third-party payers, including the plaintiffs.

“CVS intentionally told third-party payers, including Plaintiffs, that the prices charged to cash customers for these generic drugs were higher — often much higher,” the lawsuit states.

Consequently, the insurers paid CVS at rates that were much higher than the actual prices that CVS was offering its customers.

“CVS has now pocketed billions of dollars in ill-gotten gains through this unlawful scheme —  including millions from Plaintiffs,” the suit states.

The company concealed its fraudulent scheme for years, the insurers claim in the lawsuit. In an effort to avoid submitting its discounted price on claims as the “usual and customary” price, the pharmacy giant created the Health Savings Pass Program.

They described it as a membership program, even though it was essentially a cash program, with CVS even allowing non-members access to discounted drug prices, the insurers claim.

In 2016, the company replaced the Health Savings Pass Program with the Value Prescription Savings Card Program, which was similar but did not include a membership fee. Once again, the discounted cash prices for drugs offered through the program were also offered to the general public, the lawsuit alleges.

But CVS refuted the allegations, stating that the initial HSP program was a membership program intended for customers who either did not have or chose not to use insurance, while the latter VPSC program is a prescription drug card program offered and administered by a third party.

“Generic drug prices available through these programs were not the usual and customary price charged by CVS Pharmacy, nor the price available to the general public,” said Mike DeAngelis, senior director of corporate communications at CVS Health. “Neither of these programs were in any way concealed, nor fraudulent.”

The plaintiffs are seeking an award amounting to twice what they were overcharged, along with injunctive relief.

Photo: photovs, Getty Images

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