March 18, 2008 — CVS Caremark Corp.

CVS Caremark Corp. (CVS) has agreed to pay $36.7 Million to settle qui tam action filed against it by a licensed pharmacist, Bernard Listiza.

The allegations of the case were that, from 2000 to 2006, CVS improperly switched patients from the tablet version of the prescription drug Ranitidine (generic Zantac) to a more expensive capsule version in order to increase the reimbursement which CVS would receive from Medicaid. CVS, based in Woonsocket, R.I., operates more than 6,000 retail pharmacies nationwide.

By dispensing the capsule version of Ranitidine rather than tablets, CVS was able to substantially increase its reimbursement from Medicaid while providing no additional medical benefit to beneficiaries. For example, during the period December 15, 2000 through April 1, 2001, CVS charged Illinois Medicaid $79.80 for 60 Ranitidine capsules instead of $17.10 for the tablets, leading to a price difference of $62.70 on a single prescription.

“This settlement represents our continuing commitment to vigorously prosecute fraud in government health care programs,” said Jeffrey Bucholtz, the acting Assistant Attorney General for the Civil Division. “The United States will not tolerate pharmacies or any other health care providers that attempt to manipulate the Medicaid program to fill their coffers at taxpayers’ expense.”

Mr. Listiza, the pharmacist who filed the qui tam action to expose CVS’s conduct, will receive $4,309,330.74 as a reward.

See U.S. Dept of Justice Press Release 3/18/08

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