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CVS to pay $5M to settle drug pricing allegations

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WASHINGTON (AP) — The Department of Justice said Monday that a unit of CVS Caremark Corp. has agreed to pay $5.25 million to settle allegations that it reported false information on prescription drug prices to the government’s Medicare program.

Federal investigators said CVS’ RxAmerica subsidiary reported false information about the prices of generic prescription drugs between 2007 and 2008. The Centers for Medicare and Medicaid Services used this information in a website called Plan Finder, which seniors could use to estimate their out-of-pocket drug expenses. But Department of Justice officials said the actual drug prices offered by the company were “in some cases significantly higher” than those submitted for use on the website.

“Those navigating our Medicare system deserve accurate information so they can make informed choices and obtain the benefits to which they are entitled,” said Loretta Lynch, U.S. Attorney for the Eastern District of New York.

Medicare provides health insurance coverage to about 48 million American seniors and people with disabililties. Since 2006 the federal plan has included coverage for prescription drugs, though the actual plans are administered by private pharmacy benefit managers like CVS and Express Scripts.

The civil settlement resolves allegations made in two separate whistleblower lawsuits against Woonsocket, R.I.-based CVS in 2008 and 2009. The two cases were combined in the Eastern District in November 2011.

CVS said it agreed to the settlement to avoid protracted and expensive litigation. It noted the period in question came before it acquired RxAmerica through its takeover of Longs Drugs Stores.

In January, CVS agreed to pay $5 million to resolve similar allegations filed by the Federal Trade Commission.


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