CVS Caremark to Settle Medicaid Fraud Case

Chicago Authorities investigating a Medicaid fraud case involving CVS Caremark Corp. said Tuesday the CVS Caremark has agreed to pay almost $37 million to nearly two dozen states and the federal government. The payment is in settlement of claims that CVS Caremark billed Medicaid programs for a more expensive formulation of an antacid.

The settlement in the case—the first of its kind for a retail pharmacy company—came after a lengthy investigation that began in 2001, when a suburban Chicago pharmacist alerted authorities.

Attorneys said the nation's largest pharmacy chain gave Medicaid patients capsules of Ranitidine, a generic version of the heartburn medication Zantac, instead of even less-expensive tablets. Both generic versions of the medication have the same active ingredient.

Authorities said the switch is illegal and allowed the company to charge state Medicaid programs more than four times as much for each pill, leading to a bigger profit.

Woonsocket, R.I-based CVS has admitted no wrongdoing in the case.

CVS will pay the federal government about $21 million as part of the settlement. The remaining $15.6 million will be divided by Alabama, Connecticut, the District of Columbia, Florida, Georgia, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Virginia and West Virginia.

The company will also pay $800,000 for investigative costs and other fees, and agreed to sign a corporate-integrity agreement with federal authorities.

"Switching medication from tablets to capsules might seem harmless, but when that is done solely to increase profit and in violation of federal and state regulations that are designed to protect patients, pharmacies must know that they are subjecting themselves to the possibility of triple damages, civil penalties and attorney fees," U.S Attorney Patrick Fitzgerald said in a statement.