A group of Blues insurers has sued CVS Health, alleging that the healthcare giant’s pharmacy chain overcharged them for generic drugs while hiding the true cash prices for those medications.
The six insurers—Blue Cross and Blue Shield of Alabama, Blue Cross and Blue Shield of Florida, Blue Cross and Blue Shield of Minnesota, Blue Cross and Blue Shield of North Carolina, Blue Cross Blue Shield of North Dakota and Blue Cross and Blue Shield of Kansas City—filed the lawsuit (PDF) late Wednesday.
In the suit, the Blues plans allege that CVS charged significantly lower cash prices for hundreds of generic drugs through customer discount programs while seeking reimbursement from health plans at higher prices for the same medications.
The pharmacy chain did so, the health plans claim, to both boost revenue at pharmacies and to keep up with retailers like Walmart that offer lower prices on drugs.
“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 & customary] price,” the Blues insurers said in the suit. “Indeed, while carrying out this scheme, CVS internally feared that third-party payors would learn of the deception and demand correction.”
For example, CVS charged Blue Cross NC $256.73 for a 90-day supply of nadolol, a beta-blocker drug, in 2015. But members of its Health Savings Pass (HSP) program were charged $11.99 for the drug, resulting in excess charges of $244.74 to the insurer, according to court documents.
CVS Spokesperson Michael DeAngelis said in a statement to FierceHealthcare that the allegations in the lawsuit are “baseless.”
“We did not overcharge plans for prescription drugs, and we will vigorously defend against these baseless allegations, which are without merit,” DeAngelis said.
CVS has taken heat for its discount programs for years. In 2015, a class-action lawsuit was filed against the company over HSP, which led to the program’s termination in 2016. In the program, members could pay a monthly fee to obtain discounts on hundreds of generics.
That class-action suit is set to go to trial this year, and CVS said in filings with the Securities and Exchange Commission that it would be defending itself in the case.
The Blues insurers note that HSP was nixed several years ago but argue that CVS merely migrated the members of that program into a new one—Value Prescription Savings Card program—and continue similar pricing practices.
“CVS continued on with its deceptive and manipulative practice: offering the VPSC Program discounted cash prices to the general public, but not reporting those prices as CVS’s U&C prices even though they qualified as such,” the Blues plans said.
DeAngelis said that HSP was a program intended for the uninsured, while VPSC is a discount program administered by a third party—so prices charged through these programs are not the usual and customary prices charged by CVS’ pharmacies, and they are not the prices available to the general public.
“Neither of these programs were in any way concealed, or fraudulent,” he said.
The health plans are seeking millions in damages in the lawsuit.