CVS Health’s pharmacy benefit manager, Caremark, has been ordered to pay $95 million for overbilling Medicare Part D drug reimbursements, a federal judge ruled Wednesday — a decision that could balloon to $285 million if treble damages are imposed.
The ruling stems from a False Claims Act lawsuit brought by whistleblower Sarah Behnke, a former actuary at Aetna, who accused CVS Caremark Corp. of artificially inflating drug prices submitted to the Centers for Medicare & Medicaid Services (CMS), while paying pharmacies like Rite Aid and Walgreens significantly less.
Overbilling Through Price Padding
In a detailed 105-page opinion, Chief U.S. District Judge Mitchell S. Goldberg concluded that Caremark’s manipulative pricing structures led CMS to “over-subsidize drug costs”, defrauding taxpayers in the process.
“Relator has proven damages with reasonable certainty,” Judge Goldberg wrote, emphasizing that Caremark’s conduct resulted in inflated Part D drug prices and distorted CMS reimbursements.
Though the whistleblower initially alleged CVS Pharmacy was also involved, the judge cleared CVS Pharmacy and CVS Health Corp. of liability, finding insufficient evidence to link them to the pricing manipulation.
