Attorney General Gansler Announces Settlement with
National Retail Pharmacy
CVS/Caremark to Pay More Than $800,000 to Maryland’s Medicaid Program

BALTIMORE, MD (March 18, 2008) – Attorney General Douglas F. Gansler today announced a $36.7 million federal and multistate settlement with CVS/Caremark Corporation to resolve allegations of improper billing. The payment, of which Maryland’s Medicaid Program will receive $830,490, resolves claims that CVS violated state and federal statutes and regulations by switching dosage forms of ranitidine, an antacid medication commonly prescribed for Medicaid patients. The settlement was reached with the United States, 23 states and the District of Columbia. CVS/Caremark, which currently operates retail pharmacies in 38 states, furnishes pharmacy services to Medicaid recipients in Maryland.

As the result of a joint federal-state investigation, it was discovered that from April 1999 through 2006, CVS filled prescriptions for numerous Medicaid recipients by aggressively switching dosage forms of ranitidine (the generic form of Zantac, a commonly prescribed anti-ulcer medication), violating federal and state statutes and regulations. The substitution of the ranitidine capsules for tablets resulted in higher payments under the automated Medicaid reimbursement system, with no corresponding medical benefit to the individuals receiving the prescriptions.

In addition to the payment of cash settlements to the state and federal governments, CVS/Caremark has agreed to the terms of a Corporate Integrity Agreement (CIA) with the Office of the Inspector General of the United States Department of Health and Human Services. The CIA will include provisions that will ensure that CVS does not switch dosage forms of medications if the result would increase the costs to third-party payers, including Medicaid, and will subject the company’s billing practices to ongoing federal scrutiny.

The settlement was the result of negotiations jointly conducted by the United States Attorney’s Office for the Northern District of Illinois and the National Association of Medicaid Fraud Control Units, of which the Maryland Medicaid Fraud Control Unit of the Attorney General’s Office is a member.