Massachusetts settles $12M lawsuit against CVS over alleged drug overpricing
CVS has agreed to pay $12.25 million to settle a lawsuit brought by Massachusetts that accused the pharmacy giant of overcharging the state’s Medicaid program for prescription drugs. In addition to the payout, CVS has agreed to a “yearly reconciliation process” whereby it will perform an audit of drug prices to ensure it charges MassHealth members the same price as the broader public.
Massachusetts Attorney General Andrea Joy Campbell confirmed the terms in an announcement, explaining that a whistleblower complaint eventually led multiple states to file their own lawsuit. The coalition of states alleges that CVS offered lower prices for certain medications to customers who paid with cash through its discount program.
The company was then accused of failing to notify state Medicaid programs—mainly MassHealth—about the discounts, as required by law. Campbell’s office said Massachusetts pricing regulations require pharmacies to bill MassHealth at the same rate charged to the lowest-paying customer.
“When pharmacies overcharge MassHealth, they’re undermining the integrity of our public programs and leaving taxpayers to foot the bill,” Campbell said in a statement. “I am proud to announce this settlement, which will prevent future inaccurate price reporting and ensure MassHealth has the resources it needs to continue serving Massachusetts residents.”
Connecticut, Indiana, and Oklahoma—co-plaintiffs in the case—will need to secure their own settlements, based on the specific circumstances in each state.
In a statement, CVS denied any wrongdoing, noting that the settlement is not an admission of guilt. It said it intends to continue to defend itself against the remaining plaintiffs.
“We’ll continue vigorously defending against the claims concerning CVS Pharmacy’s usual and customary pricing brought by remaining plaintiffs in the case,” a spokesperson said. "For the last several years, many pharmacies, including CVS Pharmacy, have been named as defendants in other [usual and customary pricing (U&C)] lawsuits accusing the pharmacies of having submitted inflated U&C prices.”
‘Most Favored Nation’
In 1995, Massachusetts passed its own “Most Favored Nation” policy, specifically aimed at prescription drugs. The policy forbids pharmacies and insurance companies from billing the state more for medications than it would for someone covered by a commercial plan.
This impacts not only pharmacies that may bill MassHealth directly, but also the payers who manage these Medicaid plans—all of which are private companies that receive government subsidies.
The law tasks the state attorney general’s office with enforcing the policy.
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.