Home Economy Economic Activity CVS Caremark ordered to pay $95M for overbilling Medicare

CVS Caremark ordered to pay $95M for overbilling Medicare

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PBN Staff

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06/26/2025

Earns CVS Health — CVS CAREMARK, the pharmacy manager of CVS Health Corp., has been ordered to refund the U.S. government $95 million for overbilling Medicare Part D drug reimbursements./ AP FILE PHOTO / GENE J. PUSKAR

PROVIDENCE – CVS Caremark, the pharmacy manager of CVS Health Corp., has been ordered to refund the U.S. government $95 million for overbilling Medicare Part D drug reimbursements. Judge Mitchell S. Goldberg of the U.S. District Court for the Eastern District of Pennsylvania ruled on June 25 that Caremark violated the False Claims Act with

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PROVIDENCE – CVS Caremark, the pharmacy manager of CVS Health Corp., has been ordered to refund the U.S. government $95 million for overbilling Medicare Part D drug reimbursements. Judge Mitchell S. Goldberg of the U.S. District Court for the Eastern District of Pennsylvania ruled on June 25 that Caremark violated the False Claims Act with manipulative pricing structures that led to over-subsidized drug costs that defrauded taxpayers. However, Goldberg cleared both Woonsocket-based CVS Health and CVS Pharmacy of any wrongdoing due to a lack of evidence linking them to the price manipulation. “The evidence does not show that CVS Pharmacy and Caremark engaged in some arms-length negotiation or bargaining,” Goldberg said in the ruling. “Rather, it is more consistent with a parent company – CVS Health – listening to each subsidiary’s position and then implementing a budgeted [generic effective rate] aimed at benefiting the company as a whole.” The lawsuit, brought by former Aetna actuary Sarah Behnke, claims Caremark inflated drug prices submitted to the Centers for Medicare & Medicaid Services while paying other pharmacies, such as Rite-Aid and Walgreens, less. She first noticed the discrepancy in 2012-2013; however, Caremark blamed market conditions, which she did not believe. CVS spokesperson Phil Blando said the company was pleased the ruling was in CVS Health's favor and disappointed the court found against Caremark on other issues. He did not answer whether the company would appeal. On June 23, Louisiana Attorney General Liz Murrill filed several lawsuits accusing CVS Health of abusing customer information and using its dominant market position to drive up drug costs and unfairly undermine independent pharmacies. Murrill began investigating CVS after the company sent out mass text messages to thousands of residents on June 11 to lobby against legislation that took aim at its business structure. The texts warned that medication costs could go up and all CVS pharmacies in the state would close. The lawsuits, which were filed in central Louisiana’s St. Landry Parish, seek “injunctive relief, civil penalties and restitution,” Murrill said. CVS “abused customers’ sensitive information to push a political message,” Republican Louisiana Gov. Jeff Landry said at a press conference on June 25. He noted CVS had lobbied his wife over text via the same messaging chain normally used to notify her about picking up a prescription drug or other healthcare-related matters. One lawsuit argues that the text message lobbying constituted “unfair or deceptive acts” in violation of state trade law. Two Louisiana-based law firms have filed a separate class action lawsuit against CVS over the text messages. CVS has denied any wrongdoing. Material from The Associated Press was used in this report.