CVS Caremark reaches RxAmerica civil settlement with U.S. Department of Justice

WOONSOCKET, R.I. — CVS Caremark has announced that it has reached a civil settlement with the United States Department of Justice regarding its investigation into certain business practices of a subsidiary of Longs Drug Stores, which began prior to the acquisition of Longs by CVS Caremark in October 2008. 

Pursuant to the settlement agreement, RxAmerica has expressly denied any liability.

The settlement includes a payment of $5.25 million to the Department of Justice, plus costs and other fees. These payments have been fully accrued for and will not affect the company's 2012 earnings results. The investigation commenced in 2009 and has been previously disclosed in the company's SEC filings. The company agreed to settle the matter in order to avoid the burden and expense of continuing litigation.

The settlement resolves allegations that, in 2007 and 2008, Medicare Part D paid claims related to RxAmerica's submission of inaccurate pricing data to the Centers for Medicare & Medicaid Services for use in estimating prescription drug prices on the CMS website tool Plan Finder for certain generic drugs covered by a Medicare Part D Prescription Drug Plan sponsored by RxAmerica. 

The settlement also resolves all allegations in a related federal qui tam complaint filed by certain Part D Plan members. These RxAmerica Plan Finder submissions were previously the subject of the CVS Caremark consent order with the Federal Trade Commission earlier in 2012, the company stated.

CVS Caremark has cooperated fully with the United States Department of Justice in resolving this matter, and RxAmerica worked with CMS on a corrective action plan to address any Plan Finder issues in late 2008 and early 2009.  As a result of these efforts, in September 2010, CMS closed the corrective action plan, notifying the company that CMS had monitored the sponsor's Medicare Prescription Drug Plan Finder submission performance closely and that it had consistently submitted accurate pricing data to CMS throughout 2009 and 2010. RxAmerica Medicare Part D plans were last offered in calendar year 2011.