$5 Million to Settle Medicare Part D Pricing Scheme Allegations

The Department of Justice (DOJ) announced that CVS subsidiary RxAmerica paid more than $5 million to settle allegations that it knowingly submitted false pricing information to CMS in violation of the False Claims Act, resulting in significant overpayments by the agency. RxAmerica provides prescription drug benefits to Medicare Part D beneficiaries. The settlement resolves two cases brought by the federal government at the behest of whistleblowers inNew YorkandNorth Carolina.

CMS provides Medicare Part D beneficiaries with access to an online Plan Finder that allows beneficiaries to compare estimated prescription drug prices among plans. The government alleged that, over a period of two years, RxAmerica offered generic drug pricing information to CMS that was lower than the actual pricing. The company later received reimbursement for some drugs at significantly higher rates. The overpricing caused Part D beneficiaries to use up their benefits more rapidly than expected and enter the Medicare “donut-hole,” the gap in which no drugs are covered.

CVS, RxAmerica’s parent corporation, entered into a settlement agreement with the Federal Trade Commission earlier this year in which it agreed to pay $5 million to resolve similar allegations against it. Funds from that settlement are being used to compensate Medicare beneficiaries who were victimized by the scheme. HHS Inspector General Daniel R. Levinson expressed his support for the recent government actions, stating that “[p]rotecting people in government health programs from those seeking to profit by misrepresenting goods and services is one of our top law enforcement priorities.”