In late June, CVS Caremark was ordered to pay the U.S. government at least $95 million in damages for overcharging Medicare for generic drugs between 2010 and 2016. This week, the court decided on the quantity of the penalty. Despite CVS' attempts to manipulate the facts on the ground, the court was clear: CVS had committed "serious" misconduct for financial gain, and that under the False Claims Act, it owed the U.S. government three times the minimum penalty, a total of $285 million.
The court opinion, filed in the United States District Court for the Eastern District of Pennsylvania, found that every argument CVS made to bring the penalty down was faulty, including one contradicted by the company's own damages expert.
Judge Mitchell Goldberg pointed out that CVS must have known it was violating a 2010 rule from the Centers for Medicare & Medicaid Services when it filed over 500 false DIR reports, and that it had even told its shareholders that it knew the rule would hurt its profitability.
"In response, Caremark devised a scheme to earn hidden spread or indirect profit on Part D purchases, and in the process, caused CMS to over-subsidize prescription drug costs to the tune of some $95 million," the judge wrote. "When CMS and other industry participants asked questions, Caremark consistently concealed the true nature of its scheme. ... Caremark's actions cost CMS close to $100 million and made the administration of Medicare Part D—a program aimed at lowering drug costs for a vulnerable population—more difficult."
You can read the whole opinion here.