PHILADELPHIA — CVS Caremark has to pay the government at least $95 million after a federal court ruled in favor of a whistleblower, finding its pharmacy benefit subsidiary Caremark overcharged Medicare for generic drugs.
Eastern District of Pennsylvania Judge Mitchell Goldberg ruled on Wednesday that Caremark inflated Medicare Part D prices to offset other costs.
The ruling follows a bench trial in March and stems from a whistleblower lawsuit that was initially filed in 2014 by a former Aetna actuary.
The court found that, while the PBM paid pharmacies negotiated average prices, it only reported individual transaction prices, which were often higher, to insurers who then passed those numbers on to CMS. Under Medicare Part D rules revised in 2010, government subsidies are required to be based on the prices actually paid to pharmacies, including the negotiated discounts.
“We are pleased that the ruling was in our favor as to the issues of falsity for CVS Pharmacy and CVS Health Corporation’s liability, and disappointed the Court found against Caremark on other issues,” said a CVS spokesperson.
Caremark must pay $95 million back to the government. However, Caremark’s damages could rise further. Goldberg declined to rule Wednesday on the amount of civil penalties or number of false claims CVS violated. Because the lawsuit was brough by a whisteblower as a qui tam action under the False Claims Act, CVS could be liable for three times the government’s damages plus an inflation-adjusted penalty.
Opening briefs for those damages are due July 9.
