More Blues plans sue CVS, claiming it overcharged for generic drugs

A group of insurers has filed suit against CVS over generic drug pricing. (Mike Mozart/CC BY 2.0)

A group of insurers has filed suit against CVS Health, alleging that the company overcharged them for generic drugs and obfuscated the medications' true prices.

The suit, filed late last week in Rhode Island district court, claims that CVS used discount programs to charge lower cash prices for a slew of generic drugs while seeking reimbursement from payers at higher prices.

CareFirst of Maryland, Group Hospitalization and Medical Services, CareFirst BlueChoice, Blue Cross and Blue Shield of South Carolina, BlueChoice HealthPlan of South Carolina, Blue Cross and Blue Shield of Louisiana and HMO Louisiana have all signed on to the suit.

"CVS has now pocketed billions of dollars in ill-gotten gains through this unlawful scheme—including millions from plaintiffs," according to the complaint. "This is fraud. And CVS was able to perpetrate and conceal this fraud for years."

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We've reached out to CVS Health and will update this story when we hear back.

The suit echoes similar claims from other Blues plans filed in May 2020. Blue Cross and Blue Shield of Florida, Blue Cross and Blue Shield of North Carolina and Blue Cross and Blue Shield of Minnesota are among the plans who filed that prior suit.

At the center of both lawsuits are two discount programs: the Health Savings Pass (HSP) program and its successor, the Value Prescription Savings Card (VPSC). HSP was canceled in 2016 after another class-action lawsuit challenged it.

In both programs, customers can pay a monthly fee for a discount on cash prices for generic medications and is largely designed for the uninsured. The insurers say that this discounted price should have been treated as the "usual and customary price" charged to health plans.

The healthcare giant intentionally concealed these discount prices to juice their reimbursements from payers, the plaintiffs allege.

"CVS tried to have its cake and eat it too," according to the suit. "It tried to find a way to both broadly offer discounts to retain critical pharmacy customers, including cash-paying customers, and also avoid the unprofitable result of reporting the discounted prices as the U&C price."