Caremark settles whistle-blower suit

Pharmacy benefits manager Caremark RX said it has agreed to pay a $137.5 million settlement to the Department of Justice in a whistle-blower case involving rebates paid to AdvancePCS two years ago. Caremark bought AdvancePCS nearly two years ago and said that it had set aside reserves to pay the forthcoming claim. Three former AdvancePCS employees filed the lawsuit in 2002 under the False Claims Act, charging that the company characterized "rebates," which were payments from pharmaceutical companies intended to make them favor their drugs in government contracts, as administrative payments. They also alleged that AdvancePCS paid customers kickbacks to sign deals.

The case continues the increased media and regulatory attention on the PBM industry, especially around the issues of rebate payments made by pharma companies. One result has been the development of the "transparent" PBM in which some smaller PBMs are revealing all their pricing and contracting arrangements. Of course, this will all receive increased scrutiny as the Medicare Part D drug benefits will be administered mostly by PBMs.

- see this story from the Boston Globe