Corcoran et al v. CVS Health Corporation

Northern District of California, cand-4:2015-cv-03504

Exhibit L

Interested in this case?

Current View

Full Text

Exhibit L U.S. Department of Justice Carmen M. Ortiz United States Attorney District of Massachusetts John Joseph Moakley US Courthouse, Suite 9200 Writer's Direct Dial Numbers Telephone: (617) 748-3272 Fax: (617) 248-3971 Email: george henderson2@usdoj.gov 1 Courthouse Wave Boston, Massachusetts 02210 June 19, 2012 Christine G. Savage Choate, Hall & Stewart LLP Two International Place Boston, MA 02110 Re: CVS Caremark Corporation Dear Christine This responds to your letter of June 5, and specifically to your request that the government "identify states and programs which are of particular concern so that (you] can concentrate [y]our efforts on the most relevant issues." At this time we decline to specifically identify all the states and programs which may have been improperly deprived of the discounts offered by CVS in its Health Savings Pass ("HSP") program. We have not completed our review of pertinent information and have not received all relevant information from CVS. I trust you are aware, however, that numerous health care programs dictate that pharmacy reimbursement for prescription drugs shall not exceed the pharmacy's "Usual and Customary" price ("U&C"). The government is investigating allegations that, when CVS reported its U&C in connection with claims paid by various federally-funded health care programs, CVS did not include the discounts given to customers under the CVS HSP program. Information currently available to us indicates that CVS in fact has not included its HSP program discounts when reporting its U&C to at least some federally-funded payors. A number of health care programs include definitions or guidance indicating that U&C must include such discounts. For example, the federal TRICARE program reimburses pharmacies through a network agreement between the TRICARE contractor, Express Scripts, Inc., and CVS which defines "usual and customary to mean "the usual and customary retail price of a Covered Medication in a cash transaction at the Pharmacy dispensing the Covered Medication in the quantity dispensed) on the date that it is dispensed, including any discounts or special promotions offered on such date." As Corcoran - CONFIDENTIAL CVSC-0222208 PX-0614 Christine G. Savage June 19, 2012 Page 2 another example, the Alabama Medicaid agency on October 26, 2006 issued a "Medicaid Alert," which stated in part, "In response to pharmacy retailers recent announcements of reduced prices for specific generic drugs, the Alabama Medicaid Agency will consider these reduced prices to be the usual and customary price for these retailers." A Colorado Medicaid Provider Bulletin dated September 2008 (Reference B0800252) states, "Pharınacies who offer prescription discount programs must use their discounted prices as the usual and customary charge on Medicaid claims." The State of Washington Administrative Code governing Medicaid reimbursement provides that, "[i]f the pharmacy provider offers a discount, rebate, promotion or other incentive which directly relates to the reduction of the price of a prescription to the individual non-Medicaid customer, the provider must similarly reduce its charge to the department for the prescription." WAC $182-530-7000(5). In an October 11, 2006, Memorandum to All Part D Sponsors, the Centers for Medicare & Medicaid Services noted, "For example, Wal-Mart recently introduced a program offering a reduced price for certain generics to its customers. The low Wal-Mart price on these specific generic drugs is considered Wal-Mart's usual and customary price, and is not considered a one-time 'lower cash" price." These and other legislative and administrative pronouncements provide part of the legal background that is prompting the United States' investigation of CVS Caremark. We seek to determine the facts and circumstances surrounding CVS's apparent failure to include the discounts offered to HSP customers when reporting its U&C prices to certain federally-assisted health care programs. We wish to investigate when and what CVS officials knew about the definitions of "Usual and Customary," what, if any, steps they took to report U&Cs in a manner consistent with any of these definitions, and the reasons why they did not include the HSP discounts in their establishment of the U&C prices. Such information is essential in evaluating whether CVS acted "knowingly* in failing to include such discounts. See 31 U.S.C.A. $ 3729(b). We also seek to investigate the extent to which CVS's apparent failure to include the HSP discounts in reported U&C prices caused federally-assisted programs to pay more in reimbursements to CVS than otherwise would have been the case. To this end, we wish to obtain identifying information concerning all CVS pharmacies in the United States, and more specific information about the drugs eligible for the HSP program, including information of the sort shown in certain of the screen shots CVS has produced, See, e.g., CVS0002734, CVS0002697. Corcoran - CONFIDENTIAL CVSC-0222209 Christine G. Savage June 19, 2012 Page 3 Such information will enable us to obtain and analyze pertinent payment information. I expect that the HHS OIG will issue a second subpoena for such information in the near future. Please contact me if you have further questions. Sincerely, Grottend George B. Henderson, II Assistant U.S. Attorney CC: Allie Pang, DOJ Kristen M. Israelson, HHS OIG Corcoran - CONFIDENTIAL CVSC-0222210