WOONSOCKET, R.I. CVS Caremark announced on Thursday that it has agreed to pay at least $38.5 million to settle a multi-state consumer protection investigation from 2004 of certain alleged PBM business practices of its legacy AdvancePCS and legacy Caremark subsidiaries.
CVS Caremark stated that, in entering the settlement, it has expressly denied any and all allegations and there has been no finding of wrongdoing or inappropriate business conduct on its part. It noted that the probe is similar to multi-state consumer protection investigations of other major PBMs.
The company’s AdvancePCS (now known as CaremarkPCS) and Caremark subsidiaries have entered into a settlement agreement and consent order with 28 states and the District of Columbia.
The states claimed that Caremark encouraged doctors to switch patient medications in order to save money, but did not let the doctors know that Caremark would keep the savings and patients or their health plans might pay more, according to Vermont attorney general William Sorrell. Sorrell noted in a statement that Vermont will receive more than $1.1 million from the settlement.
Under the settlement, CVS Caremark will pay $12 million on behalf of legacy AdvancePCS, $10 million on behalf of legacy Caremark, $16.5 million in state investigative costs and up to $2.5 million as reimbursement for certain medical tests.
The amounts to be paid were previously accrued for by legacy Caremark in prior fiscal periods so the settlement will not impact the 2008 financial results of the company.
The consent order requires AdvancePCS and Caremark to maintain certain PBM business practices and, according to CVS Caremark, will not result in significant changes to current business practices.
The other states participating in the settlement are: Arizona, Arkansas, California, Connecticut, Delaware, District of Columbia, Florida, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nevada, New Mexico, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Virginia and Washington.