Plaintiffs allege that CVS knowingly and intentionally overcharged pharmacy customers for generic prescription drugs by submitting claims for payment to third-party payors at fraudulently inflated prices. CVS’s false and deceptive pricing scheme caused CVS pharmacy customers who purchased generic prescription drugs through third-party plans to pay significantly more in copayments than CVS charges cash-paying customers to purchase the same drugs.
Class members are CVS customers who participate in third-party health care plans (either private insurance or a federal or state funded health care program) and have filled prescriptions for generic drugs at CVS pharmacies using coverage provided by their third-party health care plans.
When a plan participant fills a prescription under a third-party health care plan, a third-party payor (generally a private, public or governmental entity) pays a portion of the participant’s prescription drug costs. The remaining portion is paid directly by the plan participant in the form of a copayment or “copay”, which may include, for example, co-insurance, flat fees, or deductibles. CVS collects the copay from the plan participant at the time a covered prescription drug is dispensed. The amount of the copay collected by CVS from the plan participant may not exceed CVS’s usual and customary price, which is generally defined as the cash price to the general public for the same drug.
CVS commonly submits electronic claims for payment to third-party payors when it fills prescriptions. In submitting electronic claims for payment, CVS is required to state accurately its usual and customary price for every dispensing event, in accordance with the National Council for Prescription Drug Program (“NCPDP”) requirements. But for years, CVS has knowingly and intentionally submitted false and artificially inflated usual and customary prices for generic drugs to third-party payors. Beginning in 2008, CVS orchestrated and carried out a massive fraud that resulted in substantial ill-gotten gains, and substantial harm to Plaintiffs and the members of the Classes they represent. CVS created the “Health Savings Pass” (“HSP”) program—the centerpiece of its fraud—as an integral vehicle for overcharging third-party payors and plan participants for covered drugs. The HSP formulary includes long-term maintenance medications, which, in many instances, are prescribed to elderly and disabled patients on a regular basis.
The HSP program served a twofold purpose for CVS. Not only was the HSP program a means by which CVS could maintain and increase its market share by fending off discounted prices from its competitors, but importantly, CVS also intended that the HSP program would serve as a mechanism to hide CVS’s true usual and customary prices from third-party payors. By submitting false and inflated usual and customary prices to third-party payors, CVS knowingly and wrongfully overcharged plan participants copay amounts that often exceeded the HSP drug prices available to the general public for the same drugs. In essence, the unlawful scheme that CVS designed allowed CVS to have its cake and eat it too: CVS could maintain and increase its cash-paying customer base while also maintaining higher reimbursement payments from third-party payors and higher copays from plan participants who filled their prescriptions at CVS pharmacies.
As a result of CVS’s unlawful scheme, CVS overcharged Plaintiffs and the other class members for generic prescription drugs (in many cases by more than three or four times the usual and customary price) from November 2008 to the present. CVS’s misconduct has caused Plaintiffs and the other class members to suffer significant damages.