CVS Caremark Corp., which operates 6,200 stores, has agreed to pay almost $37 million to the federal government and to nearly two dozen states, including Alabama, to settle claims that the nation’s largest pharmacy chain billed Medicaid programs for a more expensive formulation of an antacid. The settlement in the case — the first of its kind for a retail pharmacy company — came after a lengthy investigation that began in 2001 when a suburban Chicago pharmacist alerted authorities. The nation’s largest pharmacy chain gave Medicaid patients capsules of Ranitidine, a generic version of the heartburn medication Zantac, instead of even less expensive tablets. Both generic versions of the medication have the same active ingredient. The switch is illegal and allowed the company to more than quadruple its charges to state Medicaid programs for each pill, leading to a larger profit. Two versions of the medication are technically considered different drugs. Michael Behn, the Chicago lawyer who represented the whistle-blower in the case, observed:
Legally, switching tablets for capsules is the same as switching Zantac for Prozac. A prescription for a tablet is not a scrip for the capsule, just as a price for the tablet is not the price for the capsule.
CVS will pay the federal government about $21 million as part of the settlement. The remaining $15.6 million will be divided by Alabama, Indiana, Connecticut, the District of Columbia, Florida, Georgia, Illinois, Kentucky, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Virginia and West Virginia. The company also will pay $800,000 for investigative costs and other fees. It agreed to sign a five-year corporate integrity agreement with federal authorities, imposing ethical standards and procedures to prevent such drug switches in the future. U.S Attorney Patrick Fitzgerald, in a prepared statement, observed:
Switching medication from tablets to capsules might seem harmless, but when that is done solely to increase profit and in violation of federal and state regulations that are designed to protect patients, pharmacies must know that they are subjecting themselves to the possibility of triple damages, civil penalties, and attorney fees.
Caremark gave Medicaid patients a generic version of the heartburn drug Zantac. Both drugs contained ranitidine, but the generic drug was in capsules, which are more expensive to produce and cost more. For instance, by substituting generic ranitidine capsules to patients in Illinois instead of Zantac tablets eight years ago, Caremark was able to charge Medicaid $79.80 instead of $17.10 for 60 pills. The company also entered into a five-year agreement designed with ethical standards and procedures to prevent such drug switches in the future. The settlement came after a lengthy investigation that began in 2001, when a suburban Chicago pharmacist alerted authorities by filing a lawsuit.
Source: Associated Press
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