08/08/23 | Court Rules that Notice to Class Members Will Go Out Over CVS Objection
The U.S. District Court for the District of Rhode Island has ordered that, over an objection from CVS Health Corporation, notifications will go out to class members regarding their rights to compensation in a class-action settlement against CVS. Judge William E. Smith wrote that Hagens Berman’s proposed method of notifying class members “is the best notice practicable under the circumstances,” and that “notice will reach an approximated 80% of the class” of third-party payors or health plans who were allegedly overcharged due to a nationwide conspiracy between pharmacy benefit managers
Hagens Berman filed a complaint stating that for years, CVS knowingly submitted false and artificially inflated prices for generic drugs to third-party payors (TPPs), seeking to hide the fraudulent, over-instated charges via its Health Savings Pass (HSP) program, which the lawsuit dubs “the vehicle for its fraud.”
According to the lawsuit, “big-box” retailers with pharmacy departments, such as Walmart and Target, began offering hundreds of generic prescription drugs at significantly reduced prices in 2006. In November 2008, CVS responded by introducing its HSP program, which provided special pricing for approximately 400 generic prescription medications to individuals who paid an annual membership fee.
According to the complaint, CVS commonly submits electronic claims for payment to TPPs when it fills prescriptions, and is required to state accurately its usual and customary price for every dispensing event, which is generally defined as the cash price to the general public for the same drug. The amount collected by CVS may not exceed CVS’s usual and customary price.
CVS intended that the HSP program would hide its true usual and customary prices from TPPs to reap what the suit calls “ill-gotten gains.”
By submitting false and inflated usual and customary prices to TPPs, CVS knowingly and wrongfully overcharged TPPs amounts that exceeded the HSP drug prices available to the general public for the same drugs, according to the suit, in many cases by more than three or four times the usual and customary price from November 2008 to February 2016.
CASE TIMELINE
Judge Smith's order grants the firm's motion to file an amended complaint on behalf of plaintiffs, adding RICO claims against CVS and certain pharmacy benefit managers (PBMs). Read the order here »
A federal judge upheld a class-action lawsuit brought by third-party payors (TPPs) against CVS Health Corporation, denying CVS’s motion to dismiss the suit that accuses it of overcharging TPPs by up to four times the customary amount for generic prescription drugs, according to Hagens Berman.
In Judge William E. Smith’s opinion and order issued through the U.S. District Court for the District of Rhode Island on Nov. 1, 2016, he allowed consumer protection and unjust enrichment claims to proceed, stating that “Plaintiffs have sufficiently alleged a fraudulent scheme.”
