CVS agrees to pay $38M to resolve insulin over-distribution allegations, DOJ says
The U.S. Department of Justice (DOJ) announced Tuesday that it reached a settlement with CVS Health after authorities accused the healthcare giant of over-dispensing insulin pens to patients and billing Medicare, Medicaid and other government programs for the cost.
The case, now resolved for nearly $37.8 million, was brought by a whistleblower under protections of the False Claims Act. In this case, that’s Adam Rahimi, a former CVS pharmacist who will receive 19.5% of that amount, split between him and his attorneys—though the latter said their client will receive "most of those proceeds."
As is common, the DOJ joined the case after it found Rahimi’s accusations to be credible. According to the agency, between January 10, 2010 and December 31, 2020, CVS pharmacists handed out more insulin pens than were prescribed by clinicians, then billing the government for unnecessary “refills” that a patient didn’t need.
To cover its tracks, CVS would allegedly underreport its insulin supplies so records would match. The company allegedly told its pharmacists to lie about the “days-of-supply” its pharmacies had of insulin—meaning the expected number of days its supplies were expected to last—in order to justify the claims submitted to Medicare and Medicaid.
“CVS management was well aware that it was over-dispensing insulin,” the DOJ wrote in its complaint. “Pharmacy benefit managers (PBMs) 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 in excess of the quantities authorized by the prescription.”
The agency went on to claim that the PBMs “issued chargebacks to CVS based on these violations” but that the pharmacies never took the “necessary steps to address this long-standing problem” of misreported insulin stocks and over-distribution.
These issues occurred in multiple states, with safety net programs often billed for the insulin. While states will receive some money from this settlement, the DOJ said the bulk of it—$24.5 million—will go to the federal government.
CVS admits to dispensing unnecessary insulin—but there’s a catch
The pharmacy chain does not admit to all of the allegations and is not required to agree with the assessment of prosecutors. However, the DOJ said the company did make certain admissions, specifically:
- Many CVS pharmacies dispensed insulin pens without breaking open cartons, sometimes resulting in quantities exceeding days-of-supply limits. When claims were rejected, pharmacies often resubmitted them using the maximum allowed days-of-supply rather than the actual amount dispensed, occasionally failing to follow proper refill intervals for patients.
- CVS’s auto-refill program for insulin pens used days-of-supply data recorded by pharmacy staff to calculate refill dates and notify customers. When staff recorded lower days-of-supply than actually dispensed, the system sometimes prompted early refills, leading pharmacies to dispense insulin before it was needed and before reimbursement would be approved.
- From 2010 to 2020, payers and government programs sometimes paid CVS for insulin pen refills that were not eligible for reimbursement. As a result, CVS pharmacies occasionally dispensed more insulin to beneficiaries than was necessary.
In a statement to Reuters, the company blamed the issue on complicated labeling and supply issues, which it said have “long been a challenge for pharmacies.”
“In recent years, the evolution of PBMs and payer practices to account for insulin pen packaging and other technological enhancements have helped alleviate some of these challenges," CVS wrote.
"With this settlement, we’re pleased to put this issue behind us,” it added.
The case is now resolved.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.