CVS sued by states over alleged Medicaid overcharges

USA – CVS Health is facing a serious legal challenge after attorneys general from Connecticut, Indiana, Oklahoma, and Massachusetts filed a lawsuit accusing the company of overcharging their state Medicaid programs for prescription drugs.

The complaint centers on claims that CVS did not report lower drug prices offered to the public through discount card programs, leading Medicaid to pay more than necessary since 2016.

According to the lawsuit, CVS operated discount drug programs using third-party vendor ScriptSave – part of MedImpact, but still had full control over the discounted prices given to customers.

Despite offering lower prices through these programs, CVS allegedly failed to report these discounts as the “usual and customary” prices on claims submitted to Medicaid.

In doing so, the company may have received inflated reimbursements from public health programs, the states claim.

The lawsuit argues that the pricing decisions were set by CVS itself, not by the third-party vendors.

“CVS worked strategically with ScriptSave to set pricing, and thus CVS, not ScriptSave, was the party offering these discounts to the general public,” the complaint reads.

CVS denies any wrongdoing and dismissed the accusations. In a statement, the company said:

“The four states involved in this lawsuit have never issued guidance to pharmacies contending that third-party discount card prices constitute a pharmacy’s Usual & Customary prices.”

This isn’t the first time CVS has faced similar legal challenges. In 2020, Blue Cross insurers sued the company for allegedly charging customers less for generic drugs using discount cards, while billing insurers at higher rates for the same medications.

CVS launched its Health Savings Pass discount card program back in 2008. These types of programs are popular among uninsured customers, but critics argue they can blur the line between retail discounts and insurance reimbursements, especially when government-funded programs like Medicaid are involved.