Blue Cross Blue Shield insurers in six states have sued CVS Health Corp. over an alleged scheme to overcharge them for generic drugs by submitting claims for payment at “inflated prices.”
The lawsuit, filed May 27 in the Rhode Island federal court, added to mounting pressure that CVS has been facing since 2015 over its cash discount programs, which it said were designed to compete with Walmart and other “big-box” discounted pharmacies.
According to the complaint, health insurers typically negotiate “lesser-of” contracts with pharmacy benefits middlemen to pay the lower cost of either the negotiated drug price or the cash price that insured patients would pay. But the BCBS companies alleged that CVS had offered lower prices for “hundreds” of generic drugs and later told insurers that the prices were much higher than they actually were.
“By intentionally submitting falsely inflated usual and customary prices, CVS knew that it was being overpaid for these generic drug transactions. In fact, as internal documents show, that was CVS’s plan all along,” BCBS’s attorneys from Partridge Snow & Hahn wrote in the 46-page complaint.
“CVS has now pocketed billions of dollars in ill-gotten gains through this unlawful scheme— including many millions from plaintiffs,” they said.
CVS, however, is not the only pharma firm to land in hot water over claims for prescription drug prices.
Last month, 50 independent pharmacies sued OptumRx, a major pharmacy benefit manager, in a proposed class action over its alleged failure to comply with state pharmacy claims reimbursement laws.
That suit claimed that OptumRx paid local pharmacies substantially less than it paid large chain retail pharmacies like CVS or Walgreens and knowingly reimbursed local pharmacies below wholesale cost to stock necessary generic prescription drugs.
Still, CVS is preparing for a planned trial later this year over substantially the same issue in the first class action to target the Woonsocket, Rhode Island-based company for overcharging for generic drugs.
CVS has said in financial filings that it is “defending itself against these claims.”
The BCBS suit has cited “internal documents” from public legal filings to argue that CVS concealed its alleged scheme from third-party payors for years.
“Had CVS been open and notorious about its fraudulent pricing scheme, it never would have succeeded—plaintiffs would have insisted that CVS submit the correct usual and customary price,” the complaint said. “Indeed, while carrying out this scheme, CVS internally feared that third party payors would learn of the deception and demand correction.”
The plaintiffs in the case, captioned Blue Cross and Blue Shield of Alabama v. CVS Health, are represented by Christian Jenner, Paul Kessimian and Phoebe Roth of Partridge Snow & Hahn.