CVS to Pay $12.3M to Settle Medicaid Drug Pricing Dispute in Massachusetts

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CVS Health has agreed to a $12.3 million settlement with Massachusetts to resolve allegations that it charged the state’s Medicaid program more for prescription drugs than it charged some cash-paying customers.

The settlement, announced by the Massachusetts Attorney General’s office, concludes a lawsuit filed earlier this year. The state accused CVS of violating Medicaid pricing rules by offering cheaper rates through a discount program while still billing MassHealth — the state’s Medicaid program — at higher prices.

As part of the agreement, CVS will conduct annual reviews of its pricing practices to ensure MassHealth receives the lowest prices available, as required by state law.

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Background on the Case

Massachusetts’ pricing policy, adopted in 1995, mandates that Medicaid be charged the lowest rate a pharmacy accepts for a drug — including prices offered through discount programs. However, the lawsuit claimed CVS fell short of this requirement for years, especially on generic medications.

Instead, CVS reportedly partnered with a discount card company, ScriptSave, allowing some customers to access lower prices than those billed to MassHealth.

“When pharmacies overcharge Medicaid, they undermine public trust and burden taxpayers,” said Attorney General Andrea Joy Campbell. “This settlement ensures stronger oversight and helps safeguard public healthcare funding in Massachusetts.”

The case originated from a whistleblower complaint and was supported by attorneys general in Connecticut, Indiana, and Oklahoma, who remain involved in related legal actions.

CVS Responds

In a statement, CVS said it was “pleased to resolve” the dispute in Massachusetts and emphasized that the settlement includes no admission of wrongdoing. The company framed the agreement as a practical move to avoid prolonged litigation.

CVS added it will continue to fight similar claims brought by other states, defending its pricing practices in court.

While $12.3 million may be relatively minor for a company that earned $373 billion in revenue and $4.6 billion in profit last year, it adds to a growing list of legal challenges. In recent months, CVS has been ordered to pay nearly $1.2 billion in separate federal cases over drug pricing, both of which it is appealing.