Recently, there were several large federal and state crackdowns on Medicare and Medicaid billing practices involving PBMs brought by whistleblowers under the False Claims Act. The Act allows anyone to sue any individual or company that is defrauding the government and recover funds on the government’s behalf by filing a qui tam lawsuit. The lawsuit must be filed “under seal,” which means that the public has no access to it, but it allows the government to investigate the allegations in the lawsuit.

Recently, a qui tam action against Caremark was unsealed. A whistleblower – an Aetna auditor – brought an action against Caremark for reporting inflated prices to CMS. In the complaint, she alleged that Caremark adjusted MAC prices for Aetna Part D plans so that the drug prices for Aetna Part D beneficiaries precisely met, but did not exceed, the retail discount guaranteed in the contract between Aetna and Caremark. “In other words, the Caremark defendants carefully managed the MAC prices so as to hit the minimum aggregate discount it had guaranteed Aetna, but not to allow Aetna to get the benefit of any lower prices.” The lawsuit further alleged that Caremark inflated MAC prices in its accounting to Aetna, which did not reflect true increases in reimbursement to independent pharmacies.

Aetna investigated the price increases reported by Caremark and discovered that they were significantly higher than prices being charged by other Part D Plan Sponsors for the same drugs. (on average, 25- to 40-percent higher). The parties met to discuss the difference and potential inflation of drug prices. During the meeting Caremark admitted that it did negotiated lower prices on Aetna’s behalf but it was not required under the contract to pass these discounts to Aetna  and passing this discounts to Aetna would negatively impact Caremark’s earnings. The lawsuit argues that Caremark was legally required to report the discounts to Aetna for submission to CMS because Aetna continued reporting the prices to CMS as the negotiated prices . When Aetna indicated that it intended to perform a market check in order to decide whether to contract with a different PBM, Caremark offered to improve Aetna’s prices.

Caremark denied the allegations in the complaint by publicly stating that it complies with all applicable laws and CMS regulations related to the Medicare Part D program and that “CVS Health is committed to helping both patients and payers with solutions to lower their prescription drug costs.” Caremark may be referring to its recent launch of CVS Health program to alert pharmacists when cheaper drug is available. It describes it as an innovation in pharmacy to significantly decrease drug spending: “If the software flags a less expensive therapeutic equivalent, the pharmacist will tell the patient and seek permission to ask their doctor to make the switch. It is also being made available directly to CVS Caremark consumers through an app.” More on CVS Health pilot to reduce drug cost.