PHARMACIST STEVE

http://www.dispatch.com/news/20180406/lawsuit-cvs-pricing-actions-same-as-accused-of-in-ohio

Pharmacy giant CVS has billed the government far more for seniors’ drugs than it paid to retail pharmacies, an executive with insurer Aetna alleges in a federal whistleblower suit that was unsealed this week.

The executive, Aetna’s chief Medicare actuary, said that CVS admitted to a practice known as “spread pricing.”

“Our contention is that (CVS) Caremark did a good job negotiating good prices with the pharmacies, but did not pass those prices on,”

to the federal government, Susan Schneider Thomas, the lawyer handling the case, said in an interview.

CVS said the claims are false.

Allegations of the same practice are at the heart of an intense dispute over Ohio’s $3 billion Medicaid managed care business.

The administration of Gov. John Kasich and legislative leaders are pushing for more transparency to see if CVS is using its business managing Medicaid prescription funds to pay retail pharmacies far less than it’s getting from the state.

Independent pharmacists have accused CVS of simultaneously over-billing taxpayers and pushing out competition for its retail chain

— an allegation CVS also strongly says is untrue.

CVS hasn’t answered whether it’s engaged in spread pricing in its work as pharmacy benefit manager to four of Ohio’s five Medicaid managed-care plans. After The Dispatch reported claims of spread pricing, state officials announced this week that they would seek data from CVS and other companies to determine whether that’s the case.

The whistleblower suit unsealed this week was filed in 2014 in Philadelphia under the federal False Claims Act, which protects those who claim the government is being defrauded and entitles them to a percentage of funds collected by the government if their claims pan out. Under the law, the government can collect three times the amount a court determines it was fraudulently billed, plus other damages.

In this case, the whistleblower, Sarah Behnke, “estimates that this deliberate fraud has cost (Medicare) and beneficiaries well over $1 billion,” a statement by Thomas’s law firm says.

Aetna, which CVS is in the process of trying to buy, manages Medicare Part D plans for 750,000 beneficiaries nationwide. It contracts with CVS Caremark to be its “pharmacy-benefit manager” — a middleman that negotiates rates, pays pharmacies and bills the government.

In 2013, Behnke determined that the prices Aetna was paying for drugs “were as much as 25 percent to 40 percent higher than its competitors’ prices, or far less competitive than Aetna’s size would seem to dictate,” the lawsuit says.

She and other senior Aetna officials met with their counterparts at CVS Caremark.

“In a virtual admission of liability under the Medicare statute and Part D regulations, (CVS Caremark Senior Vice President) Allison Brown responded that the Caremark defendants had negotiated lower prices on Aetna ’s behalf, but it was not required under the contract to provide those prices to Aetna,” the lawsuit says.

Thomas, the lawyer handling the suit, said it’s OK under federal Medicare rules for CVS Caremark to bill Aetna more for a drug than it pays pharmacies. But it’s required under a 2010 rule to report the prices it paid to pharmacies to the U.S. Centers for Medicare and Medicaid Services — a rule the lawsuit says CVS ignored.

CVS denied the claims.

“We believe this complaint is without merit and we intend to vigorously defend ourselves against these allegations,” spokesman Michael J. DeAngelis said in an email. “CVS Health complies with all applicable laws and CMS regulations related to the Medicare Part D program. Also, contrary to these false allegations, CVS Health is committed to helping both patients and payors with solutions to lower their prescription drug costs.”

DeAngelis also said that the U.S. Justice Department filed a “notice of declination” of the suit. However, the case docket says that the justice department won’t intervene “at this time” — an important distinction, Thomas said. Whether the feds intervene or not, the court case will proceed, she added.

Filed under: General Problems