CVS/Caremark Corporation has agreed to pay $1,406,120 to the Indiana Medicaid program to settle allegations of improper billing, Attorney General Steve Carter announced today.

That payment is part of a $36.7 million settlement with the U.S., 23 states, and the District of Columbia and it resolves claims that CVS pharmacies systemically switched the dosage form of ranitidine from the tablet form to the capsule form of the drug, according to a statement released on Tuesday. CVS will repay Indiana $513,962 for the state’s share of the Medicaid loss, while the rest of the recovery will go to the federal government for its share of the Medicaid loss.

“Revising physician orders to maximize the dollars received from a state and federally funded program is harmful to both patient and the healthcare reimbursement system,” Carter said.

The settlement follows a joint federal/state investigation into allegations that CVS filled prescriptions for numerous Medicaid recipients by aggressively switching dosage forms of ranitidine over a seven year period, from 1999 to 2006, violating various state and federal statutes and regulations, the statement said. Ranitidine is the generic form of Zantac, a commonly prescribed anti-ulcer medication. The investigation showed that these switches caused Medicaid programs nationwide to pay CVS substantially more for the drug than they otherwise would have, the statement said.

The substation of the ranitidine capsule for tablets resulted in higher payments under the automated Medicaid reimbursement system, with no corresponding medical benefit to the individuals receiving the prescriptions, the statement said. The settlement resolves allegations that CVS made wholesale switches of ranitidine dosage forms without physician involvement and therefore violated regulations governing pharmaceutical dispensing, the statement said.

The settlement represents doubles damages, the statement said. CVS/Caremark currently operates retail pharmacies in 38 states.

Posted 3/19/2008