Dive Brief:

• CVS must pay the government at least $95 million after a federal court ruled in favor of a whistleblower, finding its pharmacy benefit subsidiary Caremark overcharged Medicare for generic drugs.
• Judge Mitchell Goldberg in the Eastern District of Pennsylvania ruled on Wednesday that Caremark inflated Medicare Part D drug prices to offset other costs.
• But Goldberg said that the False Claims case did not prove liability against the parent company CVS Health or CVS Pharmacy. A CVS spokesperson on Wednesday said the company was “pleased” about the two liability rulings, but “disappointed” the court ruled against Caremark on other issues.

Dive Insight:

Sarah Behnke, a former actuary in CVS’ insurance subsidiary Aetna, filed the lawsuit in 2014, alleging the company had violated the False Claims Act by knowingly and falsely claiming funds from the U.S. government. Although the case was filed in 2014, it was sealed until 2018 after the Justice Department declined to intervene.

At issue in the lawsuit is Caremark’s pricing arrangement with insurers and pharmacies. PBMs like Caremark sit between insurers and pharmacies in the drug pricing supply chain, and can negotiate drug costs with retail pharmacies.

Medicare Part D plans, where the the federal government partially subsidizes the cost of prescription drugs, contract with insurers, or Part D sponsors, for their plans. Part D sponsors then can contract with PBMs to negotiate drug costs with pharmacies. In some...

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