CVS, the largest pharmacy chain in the USA, has been accused of fraud against the Medicaid Programs of nearly 30 States. The allegations stem from a set of laws known as the “Usual and Customary” (“U&C”) requirements. U&C laws generally require pharmacies to disclose how much various customers are paying for drugs. The goal of U&C requirements is to make sure that Medicaid programs do not pay higher prices for drugs than non-Medicaid customers.

The States allege that CVS customers who paid in cash had access to a discount program, which was not reporting those discounted prices to the States. Instead, CVS allegedly reported those customers’ prices without accounting for the discount, resulting in Medicaid programs paying more for certain drugs than cash-paying customers.

The discounts were allegedly available to most members of the general public and were even being reported to States by some pharmacies before CVS acquired them, when the reporting of the discounts stopped. The States are now suing for the amount over the discounted drugs their Medicare programs paid. As the Attorney General of Massachusetts, one of the States that joined the suit, explained “When pharmacies offer discounted drug pricing to its customers, they must also charge MassHealth that same low price.”

The suit was originally filed by a whistleblower in 2016, under federal FCA as well as the equivalent laws of several States. The various False Claims Acts allow private individuals to sue on behalf of state governments, or the federal government, and share in a portion of the recovery. The whistleblower that filed this suit is a former pharmacist at Target, which was acquired by CVS in 2016. According to the whistleblower’s complaint, the U&C price of over 20 drugs was exaggerated by over 100%, with two drugs having their U&C price exaggerated by over 700%.

Drug pricing takes up an enormous use of resources, including both federal and state dollars. The problem has been getting worse for years. Whistleblowers who know of fraud in drug pricing can potentially file an FCA case of their own, and, if successful, share in 15% to 30% of the government’s recovery. The attorneys at Whistleblower Partners have extensive experience representing whistleblowers in cases involving healthcare fraud. If you would like more information or wish to speak to an attorney at Whistleblower Partners, please contact us for a confidential consultation.