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Blues plans sue CVS for allegedly inflating generic drug prices

The insurers claim that CVS submitted claims for payment at artificially inflated prices and concealed the true cash price of the drugs.

Susan Morse, Managing Editor

Six Blue Cross Blue Shield insurers have sued CVS Health, seeking millions of dollars for alleged over-inflated generic drug prices.

The Blues plans claim that for over a decade CVS submitted fraudulent claims for payment at artificially inflated prices and concealed the true cash price of the drugs.

CVS submitted fraudulently inflated usual and customary prices to the plans for prescription drugs purchased by their members, according to the lawsuit filed by Blues insurers in Alabama, Florida, Minnesota, North Carolina, North Dakota and Missouri.

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WHY THIS MATTERS

CVS offered hundreds of generic drugs at low, discounted prices through cash-discount programs, the lawsuit said. The cash-discount program was originally called the Health Savings Pass and later the Value Prescription Savings Card program.

CVS created and maintained the cash-discount programs for two reasons, the BCBS insurers said. First, it was to compete for cash customers who might otherwise be attracted to discounts offered by CVS's competitors, and second – and more importantly – to obfuscate its true prices from third-party payors, including the plaintiffs.

CVS intentionally told third-party payers that the prices charged to cash customers for these generic drugs were higher – often much higher, the lawsuit said. Third-party payers then reimbursed CVS based on those higher, inflated prices – instead of the actual lower prices CVS offered to the general public, including through its cash-discount programs.

CVS has made billions off of the system, the lawsuit said.

CVS denies any wrongdoing. The company said by statement: "We did not overcharge plans for prescription drugs, and we will vigorously defend against these baseless allegations, which are completely without merit. The CVS Pharmacy Health Savings Pass was a membership program intended for customers who either did not have insurance or chose not to use insurance. The Value Prescription Savings Card Program is a prescription drug card offered and administered by a third-party."

THE LARGER TREND

Usual and customary prices reflect the costs of the drugs to the consumer at the retail level, without the use of insurance.

The plaintiffs' reimbursement arrangements with pharmacy benefit managers provide that, if the usual and customary price is lower than the negotiated price, the Blues plans are only required to pay CVS the U&C price.

CVS said, "Generic drug prices available through these programs were not the usual & customary price charged by CVS Pharmacy, nor the price available to the general public. Neither of these programs were in any way concealed, nor fraudulent."

CVS has faced legal scrutiny over its cash discount programs since 2015, and the original class-action lawsuit for allegedly overcharging for generic drugs is expected to go to trial this year, according to Axios.

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com