CVS settles ranitidine dispension suit

WOONSOCKET, R.I. CVS Caremark today said that it has reached a settlement agreement with the U.S. Department of Justice and a number of state Attorneys General to resolve an investigation into the practice of its CVS/pharmacy retail pharmacies of dispensing the generic drug ranitidine in capsule rather than tablet form to Medicaid recipients.

CVS Caremark has denied any wrongful conduct and said that that for many years it has dispensed the capsule from of rantidine to all patients, not just Medicaid recipients, due to the fact that the acquisition cost of capsules was lower than the cost of tablets. According to the company, both forms contain the same active ingredients.

According to CVS Caremark, the government alleged that the practice of dispensing capsules instead of tablets was motivated by a desire to increase Medicaid reimbursement. The company has expressly denied this allegation.

The settlement calls for payment by the company of $36.7 million, plus approximately $800,000 in investigative costs and other fees. The company said this will not affect its 2008 earnings results.