Blue Cross Blue Shield Plans in Six States Sue CVS for “Systematic Prescription Overcharging”

On May 27, 2020, Blue Cross Blue Shield plans in Alabama, Florida, Minnesota, North Dakota, North Carolina and Kansas filed suit against CVS Pharmacy alleging an insurance fraud scheme involving overcharging for generic drugs for over a decade.[1]  The plaintiffs allege that Cash Discount Programs were used to hide the true prices of medications from third-party payers.  Under the alleged Cash Discount Programs, CVS Pharmacy allegedly offered hundreds of generic drugs at low, discounted prices through cash discount programs intended for the uninsured. It is further alleged that CVS Pharmacy knew it was being overpaid for generic drugs and that it submitted falsely inflated Usual & Customary (U&C) prices (which is the price offered to members of the general public without insurance). The U&C price operates as a ceiling for reimbursement. The health insurers are seeking millions of dollars in overcharges.  What is especially unique is that CVS Pharmacy’s corporate affiliate – CVS Caremark – acts as a pharmacy benefits manager, and in turn, a “gatekeeper” for many health plans.

This lawsuit follows a $269 million settlement on January 19, 2019 for claims brought by 39 states, and the District of Columbia alleging that Walgreens violated the False Claims Act by submitting false U&C prices that were higher than its Cash Discount Program.[2] The lawsuit also follows a similar lawsuit filed in March, also pertaining to U&C prices and Cash Discount Programs and having similar factual and legal nexus to Plaintiff’s allegations here.[3]

How Frier Levitt Can Help

These actions signal a growing awareness by health plans and other plan sponsors regarding pharmacy claims submission practices that are often not reviewed or acted upon by PBMs. They also signal a growing focus on pharmacies U&C claims submission practices. If you have questions about U&C pricing and prescription discount programs, we urge you to contact Frier Levitt today.


[1] Case 1:20-cv-00236-JJM-PAS. File 5/27/20. Available at

[2] Stipulation and Order of Settlement and Dismissal, U.S. ex rel. Baker v. Walgreens, Inc. and Walgreen Co., No. 12 Civ. 0300, ¶ 2(e ) (S.D.N.Y. Jan. 15, 2019).

[3] HealthNow New York, Inc, et al. v. Walgreens Co et al, 1:20-cv-01929,  N.D. II., filed 3/23/20.

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