May 27, 2020 - Health

Blue Cross Blue Shield insurers sue CVS, alleging drug pricing fraud

The red "CVS pharmacy" logo atop a CVS store.

Photo: John Lamparski/SOPA Images/LightRocket via Getty Images

Six Blue Cross Blue Shield insurers have sued CVS Health, alleging the pharmacy chain overcharged them based on "artificially inflated prices" for generic drugs and concealed the true cash prices of those drugs.

The big picture: CVS has faced legal scrutiny over its cash discount programs since 2015, and this lawsuit adds big names to a mounting problem.

The basics: Health insurers usually negotiate "lesser of" contracts with drug benefits middlemen — meaning they pay the negotiated drug price or the cash price that uninsured patients would pay, whichever is lower.

  • However, the Blue Cross Blue Shield companies allege CVS offered lower cash prices on generic drugs to compete with Walmart and other low-cost pharmacies, but told insurers those cash prices were significantly higher than they actually were.
  • CVS' goal, the BCBS insurers argue, was to force them to pay the highest rates possible.
  • For example, people enrolled in CVS' cash discount program in 2015 got a 90-day supply of blood pressure medication nadolol for $11.99. But CVS told BCBS of Florida that the cash price was $180.99 and overcharged $169 as a result, according to court documents.

Between the lines: This same issue, allegedly overcharging for generic drugs, has marred CVS for years now.

  • The original class-action lawsuit, filed in 2015, is supposed to go to trial this year. Unions have also filed class-action lawsuits.
  • CVS "is defending itself against these claims," the company has said in financial filings.

Go deeper: Read the lawsuit and examples of drugs that were allegedly overcharged.

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