For numerous years, the federal government and numerous states investigated claims of wrongdoing asserted against the PBM Caremark, and predecessor-in-interest organizations (such as AdvancePCS).

In March 2008, CVS Caremark settled the claims of 28 states and the District of Columbia by agreeing to pay $36.7 million dollars.  A copy of the government press release and settlement agreement can be read here.  Caremark also agreed to pay $138 million to settle claims by the federal government.

In 2008, CVS Caremark also agreed to pay $21.1 million to settle claims that it illegally switched patients from the tablet version of the drug Ranitidine (generic Zantac) to a more expensive capsule version for the sole purpose of increasing Medicaid reimbursement. For example, CVS pharmacies in Illinois would charge Medicaid $79.80 for 60 Ranitidine capsules, rather than $17.10 for the tablets prescribed, increasing reimbursement by $62.70 on a single prescription. A discussion of the settlement can be found here and here (at the bottom of the article).

The wrongdoing identified in lawsuits against CVS Caremark reflects ongoing industry problems that all payers must keep in mind when drafting and negotiating PBM/client contracts.