CVS Settles Allegations of Overcharging for Insulin Pens
Settlement Overview
CVS has reached an agreement to pay nearly $38 million to resolve allegations that its pharmacies overcharged the government for insulin pens over the course of a decade. This settlement concludes a lawsuit initiated by the Department of Justice (DOJ) alongside multiple whistleblower claims. The DOJ reported that between 2010 and 2020, CVS pharmacies engaged in practices such as refilling insulin products too early, dispensing more than necessary, and underreporting the amount of insulin dispensed to evade detection. Of the settlement amount, approximately $25 million will go to the U.S. government, while the remaining funds will be distributed among various states. CVS admitted to some accountability in the matter and expressed relief in a statement, indicating a desire to move forward.
Insight on Insulin Pen Dispensing Practices
Insulin pens are widely utilized by diabetic patients for blood sugar management, with around three-fifths of Americans with diabetes relying on them. Typically, these pens are packaged in cartons of five, with each pen containing 300 mL of insulin. When dispensing insulin pens to patients enrolled in government programs such as Medicare or Medicaid, pharmacies are mandated to report specific data, including the quantity dispensed and the expected duration of the supply. Pharmacy benefit managers (PBMs) usually reject claims that surpass established limits, involve premature refills, or cover complete cartons, which may exceed the allowed days of supply.
However, CVS allegedly circumvented these regulations by submitting misleading claims. The government’s complaint asserts that CVS instructed its pharmacy staff to report the maximum days-of-supply permitted under a patient’s coverage when dispensing full cartons of insulin, often underestimating the actual amount provided. This led to premature refills, causing some patients to accumulate excessive amounts of unused insulin. Despite audits revealing consistent breaches of dispensing guidelines, CVS pharmacies reportedly continued these practices.
CVS’s Response and Recent Penalties
In response to the allegations, a CVS spokesperson acknowledged the complexities associated with insulin pen billing, citing factors such as labeling changes, lack of single pen packaging options, variability in insulin dosing, and differing supply limits among plans. The spokesperson noted that improvements in PBM and payer practices related to insulin pen packaging and technological advancements have mitigated some of these challenges. The company expressed satisfaction with the settlement, emphasizing the avoidance of costly litigation.
This settlement is part of a broader trend of penalties imposed on CVS this year. In July and August, the company faced fines of $290 million and $949 million, respectively, for allegedly overcharging the U.S. government for prescription drugs. Additionally, CVS has recently agreed to multi-million dollar settlements in Massachusetts and North Carolina related to overprescribing and “dummy code” allegations.