CVS Caremark was sentenced to a fine of $ 290 million for Medicare fraud

Diving brief:

• A federal judge ordered the CVS Caremark to pay nearly $ 290 million in damages after a denunciator has proven that the pharmacy service manager overloaded Medicare for prescription drugs.
• On Tuesday, judge Mitchell Goldberg, of the Pennsylvania Oriental District Court, tripled the damages he had previously ordered Caremark to pay $ 285 million, and nailed for a civil fine of $ 4.9 million.
• CVS – who tried and failed to convince Goldberg to reduce the penalty – said she was planning to appeal the decision.

Diving insight:

The case against Caremark dates back more than a decade. In 2014, a denunciator accused the PBM of knowingly distorting the cost of drugs in Walgreens and Rite Aid stores, causing regimes of Medicare prescription drugs, including Aetna, to inflate how much their beneficiaries paid. Consequently, these plans overloaded health insurance for medicines for years.

The denunciator, Sarah Behnke, is a former chief news of Medicare leaves in Aetna, which CVS bought in 2018.

Real damage due to the Caremark program reached $ 95 million. But Goldberg has chosen to triple the amount authorized under the False Claims Act, which allows the denunciators to file a complaint on behalf of the government and to share potential damage.

Caremark argued that damages were excessive. Goldberg allowed the fine to be important, but said it was just according to Caremark actions.

“The evidence at the trial clearly indicated that fraud was financially financially reasoned, and not the result of an innocent or erroneous belief,” the judge wrote in his decision. “On many occasions, Caremark has had the opportunity to explain his program to the CMS and other participants in the industry, and repeatedly, Caremark has hidden the true nature of his pharmacy contracts.”

Caremark lawyers also tried to reduce the civil sanction by $ 4.9 million, arguing that the plans were responsible for the filing of false complaints, not the PBM itself, and that the behavior was limited to two pharmacies over two years.

But Caremark knew that his actions would cause illegal allegations, according to Goldberg.

“Caremark has designed a regime to make hidden or indirect benefits on purchases of part D and, in doing so, caused prescription costs on the CMS,” wrote the judge in his decision. In addition, “Caremark should not pay less, because he has committed fraud only on two of the country’s largest pharmacies channels,” said Goldberg.

“We are happy that Behnke’s decision in June is in our favor as to certain questions for CVS Pharmacy and CVS Health Corporation, and disappointed the court tried against Caremark on other questions. We are planning to appeal,” said a spokesperson by email.

Tuesday’s penalty occurs a month after the CVS was affected by another major fine – $ 949 million – in a separate government fraud case, it centered on the long -term care pharmacy of the health care swamp. CVS also calls on this decision.

Payments in hundreds of millions of dollars are significant but pale compared to CVS annual income, which reached $ 372.8 billion in 2024.

However, decisions are involved in the intensification of the public examination of the PBM, which is between drug manufacturers, payers and pharmacies in the pharmaceutical supply chain. Congress and antitrust legislators have been increasingly critical of the main PBMs to take advantage of their position and market power in order to take advantage, although PBM support that they save patients, payers and money from American taxpayers by reducing the costs of drugs.