The U.S. Attorney's Office, Southern District of New York announced that the national retail pharmacy chain agreed to settle a health care fraud lawsuit over claims it dispensed more insulin to diabetic patients than they needed.
The $37.76 million settlement resolves allegations that over a 10-year period, CVS violated the False Claims Act by improperly billing and dispensing insulin pens to patients enrolled in government health care programs, including Medicare, Medicaid, TRICARE, and the Federal Employees Health Benefits Program.
The Department of Justice (DOJ) claims CVS improperly requested and received reimbursement for premature refills, dispensed more insulin pens than patients needed according to their prescriptions, and falsely under-reported the days-of-supply of insulin that its pharmacies dispensed.
As part of the settlement, CVS will pay $24 million to the United States and the remainder to various states. The company also admitted and accepted responsibility for receiving a substantial amount of money from the government for insulin pen refills that were ineligible for reimbursement and that CVS pharmacies dispensed more insulin to beneficiaries than they needed.
According to the DOJ, from January 1, 2010, through December 31, 2020, CVS made a concerted effort to fill insulin prescriptions as quickly as possible and to ensure that reimbursement claims for insulin pens were not rejected. The government said CVS instructed its pharmacy staff simply to report the maximum days-of-supply allowed under the beneficiary’s plan when dispensing full insulin pen cartons, which was often lower than the actual days-of-supply dispensed. Many CVS pharmacies did not internally document and use the actual days-of-supply dispensed to determine when patients could next refill their prescription. Instead, CVS’ dispensing software calculated refill dates automatically based on inaccurate days-of-supply data reported to the pharmacy benefit manager.
As a result, CVS pharmacy staff repeatedly refilled prescriptions prematurely, dispensing more insulin to beneficiaries than they needed and sooner than they needed it according to their prescriptions.
The government claims CVS management understood it was over-dispensing insulin. Pharmacy benefit managers conducted periodic audits of CVS pharmacies and repeatedly found violations of the dispensing rules, including reporting invalid days-of-supply data, refilling insulin pen prescriptions too soon, and dispensing insulin pens more than the quantities authorized by the prescription. The pharmacy benefit managers issued chargebacks to CVS based on these violations. For several years, CVS management knew that insulin pens were among the drug products most frequently subject to chargebacks for premature refills. Yet, despite these audit findings, CVS failed to take necessary steps to address this long-standing problem during the covered period.
In connection with the filing of the lawsuit and settlement, DOJ joined five private whistleblower lawsuits that had previously been filed under seal pursuant to the False Claims Act. The initial whistleblower case was filed by Adam Rahimi, a pharmacist who worked for CVS, according to Vogel, Slade & Goldstein. The whistleblowers will receive 19.5 percent of the government's recovery, with Rahimi receiving most of the money.