The big pharmacy chain has agreed to pay $37 million to settle what is believed to be the first case involving prescription switching by a retailer. According to a multi-state lawsuit, CVS allegedly charged the government up to 400 percent more for Medicaid patients by illegally changing generic Zantac scrips from tablets to higher-priced capsules. The federal complaint and settlement agreement, which involves 24 states, says CVS made huge profits by evading federal and state price ceilings when it unlawfully switched to the capsules.

The generic form of Zantac, which is an antacid, typically comes in tablets. The federal government set maximum prices that Medicaid would pay for tablets, while infrequently prescribed capsules had no maximum prices. So when CVS switched patient scrips, the change wound up costing taxpayers up to 400 percent more, according to court documents. The case was pursued under federal and state False Claims Acts for more than five years by Illinois pharmacist Bernard Lisitza who, in a statement, his lawyer calls “your old-fashioned corner pharmacist.”

For its part, CVS denies liability, wrongdoing or improper conduct, but has entered into a Corporate Integrity Agreement with the HHS Office of Inspector General. In a statement, the chain says: “By way of background, for many years, the company purchased and stocked the capsule form of ranitidine across its chain of retail stores for dispensing to all patients, not just Medicaid recipients, due to the fact that the acquisition cost of capsules was lower than the cost of tablets. At various times, certain state Medicaid programs reimbursed pharmacies at a higher rate for capsules than for tablets.”

For more info, see PharmacyFraudSettlement