A recently unsealed lawsuit filed by a whistleblower against CVS Caremark accuses the corporation of overcharging Medicare and Medicaid for prescription drugs.
The bombshell lawsuit could potentially return hundreds of millions of dollars in taxpayer funds to the government health care programs if the whistleblower’s False Claims Act allegations hold up in court.
Sarah Behnke, who worked as an actuary for Aetna, claims CVS Caremark was good at negotiating lower prices with drug manufacturers as Aetna’s pharmacy benefit manager, but it did not pass those savings on to the government.
The purpose of having companies such as Aetna, which provides Medicare Part D coverage, and CVS Caremark involved in government health care programs is to keep costs down. But CVS allegedly charged Aetna, one of its largest Medicare drug clients, 25 percent to 40 percent more than its competitors.
As a result, the federal and state health care programs that contracted with Aetna also had to pay higher prices for drugs, potentially inflating drug prices and co-pays for Medicare beneficiaries and raising the costs for all U.S. taxpayers.
The whistleblower lawsuit alleges CVS Caremark submitted false Medicare Part D costs to the government since at least 2007.
Ms. Behnke started investigating CVS Caremark’s drug costs in September 2012, after the company notified Aetna of a price increase on about 60 percent of the drugs used by Aetna’s Part D beneficiaries. She allegedly found that CVS Caremark had been charging Aetna substantially higher prices for prescription drugs than other Medicare Part D providers paid, even before the price hike went into effect.
She filed the suit under the whistleblower provisions of the False Claims Act the following year.
According to Healthcare Finance, the whistleblower lawsuit alleges that when Aetna confronted CVS about the higher drug prices, CVS Caremark responded that it had indeed negotiated lower prices on Aetna’s behalf, but it was not required to pass those savings on to Aetna per the terms of its contract.
“Any increase in Aetna’s discounts would have only been achievable by getting greater discounts from the pharmacies and should not have impacted [CVS Caremark’s] bottom line since the prices were merely pass-throughs, the lawsuit said,” according to Healthcare Finance. “That is, [CVS Caremark’s] profit for the [pharmacy benefit manager] services was covered through administrative fees, not a mark-up on drug prices.”
Cleveland’s WKYC reported that both CVS Caremark and Aetna wanted to keep the lawsuit under wraps, but it was finally able to obtain a copy of the newly unsealed suit. However, both companies have been engaged in a $69 billion merger that is expected to close in the second half of 2018, if it gains regulatory approval.