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State probes CVS refill allegations

California pharmacy regulators have opened an investigation into reports that CVS Caremark Corp. refilled prescriptions and billed insurance companies without patients' consent.

October 16, 2012|By Marc Lifsher, Los Angeles Times
  • CVS is being investigated by multiple agencies over its precription practices. Above, a San Francisco location.
CVS is being investigated by multiple agencies over its precription practices.… (David Paul Morris, Bloomberg )

SACRAMENTO — State pharmacy regulators have opened an investigation into reports that CVS Caremark Corp. refilled prescriptions and billed insurance companies without patients' consent.

Virginia Herold, executive officer of the California Board of Pharmacy, said Tuesday that investigators were probing complaints about the refill practices of the country's largest drugstore chain after Walgreen Co.

Herold said the complaints concerning "CVS and refills" were similar to allegations raised in four Los Angeles Times reports published in the last three months.

Customers in California and other states said they were surprised to find that CVS had renewed doctors' prescriptions and billed insurers without their consent and, in some cases, enrolled them in an automatic refill service without their knowledge, according to Times columns.

CVS policy requires that a patient's consent "be obtained before a prescription is filled," said Michael DeAngelis, a spokesman for the Woonsocket, R.I., company. CVS, he said, would provide the pharmacy board with any information needed.

The state board is the third government body known to be looking into the company's refill practices.

Late last week, the inspector general's office for the U.S. Department of Health and Human Services launched an investigation into allegations that CVS billed Medicare for medicine that patients hadn't ordered or picked up, according to a federal official who did not have authorization to discuss the matter and asked not to be identified.

The inspector general's inquiry is the starting point for any case involving possible fraud involving Medicare, which provides health coverage for about 50 million Americans.

Findings from both the state and federal probes could be referred to local district attorneys, the state attorney general or the U.S. Department of Justice for prosecution, officials said.

The pharmacy board has the power, in extreme cases, to revoke the professional pharmacy licenses of companies or individuals found to violate state law, effectively shutting them down.

In addition, California's broad Unfair Competition Law prohibits "any unlawful, unfair or fraudulent business act." Fraud charges also could be filed under California's insurance and managed healthcare laws.

Herold said her investigators are paying particular attention to complaints that CVS allegedly enrolled people in its automatic-refill program without their approval.

That possibility was underscored by confidential emails sent this year by a CVS executive in New Jersey, who supervised dozens of regional pharmacists. Officials at the New Jersey Division of Consumer Affairs said it will investigate to see if any state laws were violated.

The emails, obtained by The Times, described an internal quota for prescription refills that threatened pharmacists who missed their quotas with "major personnel changes."

CVS acknowledged two weeks ago that the emails were legitimate but said they were not the result of any company policy. Spokesman DeAngelis blamed the action on an overzealous manager.

Within a week, however, customers from California and other states complained that CVS had automatically refilled their prescriptions without their knowledge or consent. DeAngelis said that company policy "specifically directs" pharmacists to get customer approval first.

The latest investigations aren't the first into CVS practices. Last year, the chain agreed to pay $17.5 million to resolve allegations that the company falsified claims for prescription drugs for Medicaid programs in California and nine other states.

In that case, the Justice Department accused CVS of submitting inflated bills to the healthcare program for low-income people who had other insurance as well. As part of the settlement, CVS denied any wrongdoing but agreed to allow federal authorities to monitor its billing procedures.

The FBI estimates that healthcare fraud costs the country at least $80 billion annually, and federal authorities have been stepping up efforts to crack down particularly on Medicare fraud.

Early this month, federal prosecutors filed criminal charges against 91 doctors, nurses and other medical professionals for allegedly submitting nearly $430 million in false bills to the agency. In May, a similar investigation resulted in criminal charges accusing 107 people of defrauding Medicare of $452 million.

David Balto, a former policy director for the Federal Trade Commission, said federal and state officials had not paid enough attention to CVS since the company bought Caremark for about $21 billion in 2006.

The deal made CVS not just a leading provider of prescription drugs but also a leading manager of pharmacy benefits for employers and insurers. CVS bought rival Longs Drugs for almost $3 billion in 2008.

"When you have that much control over the market," Balto said, "there's a tremendous temptation to act in ways that aren't in the best interest of consumers."

marc.lifsher@latimes.com

Times columnist David Lazarus contributed to this report.

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