CVS Health agreed to pay $37.76 million to settle allegations that it dispensed too many insulin pens to patients and improperly billed federal healthcare programs for those insulin prescriptions.
The settlement, which the Department of Justice announced Tuesday, resolves allegations that during a 10-year period, from 2010 through 2020, CVS violated the False Claims Act in connection with its billing and dispensing of insulin pens to patients enrolled in government healthcare programs, including Medicare, Medicaid, TRICARE and the Federal Employees Health Benefits Program.
The federal government alleged that CVS improperly requested and received reimbursement for premature refills, dispensed more insulin pens than patients needed per their prescriptions, and falsely under-reported the days-of-supply of insulin that its pharmacies dispensed.
Under the settlement approved by U.S. District Judge John G. Koeltl, CVS agreed to pay a total of $37.76 million, with $24.4 million to the United States and the remainder to various states.
As part of the settlement, CVS also admitted and accepted responsibility for certain conduct alleged by the government in its complaint, including that government healthcare programs "paid CVS substantial amounts for insulin pen refills that were ineligible for reimbursement and CVS pharmacies dispensed more insulin to beneficiaries than they needed," the DOJ said in a press release.
In a statement, a CVS Health spokesperson said, "While we do everything we can to ensure patients can access the medications they need, insulin pen billing has long been a challenge for pharmacies. Factors such as FDA labeling changes, no single pen packaging options, insulin dosing variability, and varying payor supply limits and instructions have made billing for these medications incredibly complex."
"In recent years, the evolution of PBM and payor practices to account for insulin pen packaging and other technological enhancements have helped alleviate some of these challenges. With this settlement, we’re pleased to put this issue behind us and avoid the cost and expense of litigation," the retail pharmacy chain's spokesperson said.
U.S. Attorney Jay Clayton said CVS engaged in a "decade-long practice of repeatedly prematurely refilling insulin prescriptions for patients and improperly billing government healthcare programs for more insulin than patients needed."
"These programs rely on pharmacies to follow appropriate refill schedules and to accurately report the amount of medicine dispensed, which CVS pharmacies frequently failed to do. This settlement reflects our continued commitment to holding pharmacies to account, enforcing rules designed to keep costs down, and protecting taxpayer dollars," Clayton said in a statement.
In connection with the filing of the lawsuit and settlement, the federal government joined five private whistleblower lawsuits that had previously been filed under seal pursuant to the False Claims Act.
Federal authorities alleged in the lawsuit that from January 1, 2010 through December 31, 2020, CVS violated the False Claims Act by knowingly submitting, or causing to be submitted, false claims to government healthcare programs for reimbursement for insulin pens where CVS: dispensed more insulin to beneficiaries than was specified by their prescriptions and refilled beneficiary prescriptions substantially before they needed the refills; falsely under-reported the days-of-supply for the insulin refills, which often prevented pharmacy benefit managers from detecting that the refills were premature; and failed to comply with applicable rules when refilling insulin prescriptions requiring pharmacies to calculate refill dates using the actual days-of-supply dispensed.
According to the lawsuit, CVS instructed its pharmacy staff simply to report the maximum days-of-supply allowed under the beneficiary’s plan when dispensing full insulin pen cartons, which was often lower than the actual days-of-supply dispensed, federal authorities alleged. CVS pharmacy staff repeatedly refilled prescriptions prematurely, dispensing substantially more insulin to patients than they actually needed and substantially sooner than they needed it according to their prescriptions. As a result, some patients accumulated large quantities of unused insulin, which was both wasteful and potentially dangerous as insulin can expire, the DOJ said in its press release.
And federal authorities allege that CVS management was well aware that it was over-dispensing insulin. "PBMs issued chargebacks to CVS based on these violations. For several years, CVS management knew that insulin pens were among the drug products most frequently subject to chargebacks for premature refills. Yet, despite these audit findings, CVS failed to take necessary steps to address this long-standing problem during the covered period," the DOJ said.