Caremark Faces Whistleblower Lawsuit Over Medicare Part D Overbilling Claims

A whistleblower has alleged that Caremark, a pharmacy benefits manager (PBM) owned by CVS and contracted by Aetna Life Insurance Co., overbilled Medicare Part D for sponsored prescription drugs, resulting in estimated damages between $240 and $330 million. The claim centers on Caremark billing Medicare for reimbursement rates exceeding the amounts it paid pharmacies for drugs under the generic effective date (GER) pricing structure. Caremark counters that pharmacies sometimes retain overpayments when the PBM pays above the GER, but according to the whistleblower, such cases are infrequent, with budgeted GER or similar figures typically used.

Caremark maintains that no wrongdoing occurred, emphasizing the absence of enforcement actions by federal regulators despite the whistleblower's claims. The company further contends that its employees acted in good faith, noting that Part D drug prices generally exceed those for commercial insurance plans, complicating the pricing landscape.

The whistleblower, Sarah Benke, initially filed the False Claims Act lawsuit in 2014 after serving as a Part D head actuary for Aetna. She argues that Caremark charged Medicare Part D substantially higher prices than other Part D sponsors for equivalent medications. The ongoing case is filed in the U.S. District Court for the Eastern District of Pennsylvania under case number 2:14-cv-00824.

Caremark sought judicial approval last year to pursue an interlocutory appeal on whistleblower regulation interpretations, aiming to clarify legal standards early in the litigation. However, the court declined, citing concerns that such an appeal would prolong already extensive litigation involving complex technical and evidentiary issues.

This case underscores ongoing scrutiny of PBM billing practices, Medicare Part D reimbursement policies, and the interpretive challenges surrounding the False Claims Act as it applies to the pharmaceutical supply chain. It also highlights potential implications for payers, providers, and regulators in monitoring compliance and pricing transparency within the Medicare Part D program.