WOONSOCKET, R.I. — CVS Caremark Corp. has agreed to pay $5.25 million under a settlement with the U.S. Department of Justice regarding allegations of false pricing information for Medicare Part D benefits.
The company said late Monday that the civil settlement stems from a previously disclosed Justice Department investigation of certain business practices of RxAmerica, a subsidiary of Longs Drug Stores Corp., that began before CVS Caremark acquired Longs in October 2008.
CVS stated that with the settlement, the department’s allegations are now resolved and RxAmerica "has expressly denied any liability."
The Justice Department claimed that between Jan. 1, 2007, and Dec. 31, 2008, RxAmerica submitted inaccurate data to the Centers for Medicare & Medicaid Services (CMS) for use in estimating prescription drug prices on the CMS Plan Finder online tool for certain generic drugs covered by a Part D prescription drug plan sponsored by RxAmerica. As a result, the government alleged, RxAmerica received Part D payments for claims for the covered drugs at prices that in some cases were higher than the pricing data that RxAmerica submitted to CMS for use on the Plan Finder.
CVS said the settlement also resolves all allegations in a related federal complaint filed by certain members of the Part D plan regarding inaccurate pricing information. The company explained that these RxAmerica Plan Finder submissions were the subject of a consent order with the Federal Trade Commission earlier this year in which CVS agreed to deposit $5 million into a fund for compensating consumers who bought coverage for the 2008 plan year from an RxAmerica-sponsored Part D plan.
"CVS Caremark has cooperated fully with the United States Department of Justice in resolving this matter, and RxAmerica worked with CMS on a corrective action plan to address any Plan Finder issues in late 2008 and early 2009," CVS Caremark stated Monday. "As a result of these efforts, in September 2010, CMS closed the corrective action plan, notifying the company that CMS had monitored the sponsor’s Medicare Prescription Drug Plan Finder submission performance closely and that it had consistently submitted accurate pricing data to CMS throughout 2009 and 2010. RxAmerica Medicare Part D plans were last offered in calendar year 2011."
CVS added that it agreed to settle the matter to avoid the burden and cost of ongoing litigation.
