CVS To Pay $36.7 Million For Improperly Switching Medications

CVS has settled a lawsuit that alleges the pharmacy giant improperly switched customers to a more expensive form of their medication in order to collect more money from Medicaid.

A lawsuit alleging fraud by the chain-drugstore company was brought by an Illinois pharmacist and joined by the federal government and 23 states that paid for the medication.

The complaint, filed in 2003 in U.S. District Court for Northern Illinois, alleges that CVS pharmacies switched Medicaid patients taking the generic form of stomach medication Zantac to capsules from tablets. Medicaid sets maximum reimbursement prices for the tablet form of the drug but not for capsules, which are more expensive but prescribed less frequently by doctors.

The suit alleges that the switch cost taxpayers as much as 400% more than what would have been paid for tablets. The pill-switching allegedly took place from April 1, 1999, through Dec. 31, 2006.

The case was brought by Bernard Lisitza, who worked as a pharmacist processing CVS prescriptions. Mr. Lisitza previously filed a suit against pharmacy company Omnicare Inc. that settled in 2006 for $50 million. Both suits were filed under the False Claims Act, which allows people to file claims alleging fraud against the government and lets them recover a share of any payments.

Mr. Lisitza’s share of the settlement will be $4.3 million. Sort of makes you wish you knew about fraud against the government, doesn’t it?

CVS denied wrongdoing.

CVS to Pay $36.7 Million Over Claim Of Improper Switch of Medications [Wall Street Journal]