(Bloomberg) — CVS Health Corp. was accused in a lawsuit by pharmacy customers of intentionally overcharging for generic prescription drugs by submitting claims for payment to third parties at inflated prices.
Beginning in 2008, CVS orchestrated a "massive fraud that resulted in substantial ill-gotten gains," according to the complaint filed Thursday in San Francisco federal court. The drugstore chain sometimes charges three or four times the customary price for generic drugs, the customers said.
The lawsuit's allegations involve the company's Health Savings Pass, a discount program for patients paying cash for prescriptions. Customers who buy prescriptions through third-party plans pay higher prices than those paying cash, according to the complaint.
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The plaintiffs seek class-action status to represent other customers, plus unspecified damages and a court order blocking the alleged scheme.
A similar federal complaint was dismissed in Massachusetts, said Michael DeAngelis, a CVS spokesman. He said he couldn't comment on the allegations in the San Francisco case because the company hadn't been served with the lawsuit.
"It is important to note that co-pays for prescription medications are determined by a patient's prescription coverage plan, not by the pharmacy," DeAngelis said in an e-mail. "Pharmacies charge the co-pays that are set by the coverage plans."
CVS is the second-largest pharmacy chain in the U.S. after Walgreen Co. As of Dec. 31, 2014, it operated 7,822 retail drugstores.
Health Savings Pass is a discount program and not insurance, DeAngelis said.
CVS, which started the program to compete with discount retailers including Wal-Mart Stores Inc. and Target Corp., has failed to match the competition's lower prices, according to the complaint.
The CVS program is the "centerpiece of its fraud," according to the complaint. The customer loyalty program costs $15 a year to join and offers customers 90-day supplies of some generic drugs for $11.99, according to the company's website.
The case is Corcoran v. CVS Health Corp., 3:15-cv-03504, U.S. District Court, Northern District of California (San Francisco).
–With assistance from Ryan Sachetta in New York.
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