A whistleblower with Aetna who accused CVS Caremark of gouging Medicaid and Medicare customers with high prescription-drug costs has been placed on paid administrative leave by the insurance company.
The move comes after the whistleblower’s lawsuit was unsealed in federal court in early April. It also comes as CVS Caremark, one of the country’s largest pharmacy benefit managers, pursues the acquisition of Aetna for a reported $69 billion.
Sarah Behnke, at the time the chief Medicare actuary for Aetna, filed the whistleblower lawsuit, which is pending. Her attorney told The Dispatch that the decision by Aetna to send her home is “retaliatory and inappropriate.”
Behnke said her internal investigation found that CVS Caremark was billing the federal government significantly higher prices for seniors’ drugs than was appropriate.
The scheme has been used by CVS Caremark since 2007, Behnke said, and has cost the federal government more than $1 billion in fraudulent charges, according to her lawsuit.
Some pharmacists say the same practice is happening in Ohio. CVS Caremark is the pharmacy benefit manager for four of Ohio Medicaid’s five managed-care companies.
A pharmacy benefit manager, or PBM, is the middleman entity that negotiates with drug manufacturers and then sets the prices for insurance companies and pharmacies. Those prices are what the public pays for prescription drugs.
State legislators in Ohio have requested that CVS provide pricing lists to see whether so-called “spread pricing” is happening in Ohio. Spread pricing is when the PDM negotiates a lower or discounted price with a drug manufacturer and then negotiates another price with the pharmacy. PBMs also negotiate different payments to pharmacies to make money. Those discounts typically are not passed on to the health-insurance provider.
CVS Caremark officials, who have rejected allegations of spread pricing or wrongdoing, say they will turn over documents by June 1. They say they were not aware of who filed the lawsuit until after announcing the plan to buy Aetna.
“We believe this complaint is without merit, and we intend to vigorously defend ourselves against these allegations,” CVS Health spokesman Michael DeAngelis said in an email response. Should CVS Caremark acquire Aetna, he said, “CVS Health policy prohibits the taking of punitive action against a whistleblower.”
Aetna officials declined to comment.
The lawsuit and CVS Caremark’s planned acquisition of Aetna both have significant implications for taxpayers, who fund Medicare and Medicaid programs.
Aetna would be the first health-care provider owned by CVS. If the purchase is approved by the U.S. Department of Justice, it would give the pharmacy giant a health-care conglomerate of managed-care and pharmacy benefit management operations.
That control of the entire chain of health care by CVS would, in effect, create a vertical monopoly and directly affect how much customers end up paying for health care, including prescription drugs.
The Trump administration has heavily criticized these types of conglomerations as being “monopolies” that allow companies in the prescription-drug chain to conceal prices. Last week, President Donald Trump’s Food and Drug Administration chief called it a “rigged system” against the public.
PBMs such as CVS Caremark were created to lower prescription-drug costs in the marketplace. During the past five years, prescription-drug costs have been the fastest growing facet of the health care chain, according to a recent study by U.S. News and World Report.
Three PBMs control between 80 and 90 percent of the prescription drugs in the marketplace, with an estimated $400 billion in gross sales, according to the IMS Institute for Healthcare Informatics. PBMs conceal how they affect drug prices from insurance providers and the public.
Behnke filed a federal False Claims Act lawsuit in 2014 under seal. Whistleblower lawsuits are sometimes filed under seal to allow federal prosecutors time to review the allegations and get involved.
Behnke’s attorney, Susan Schneider Thomas, said the government deferred participation for now. That allowed the judge to unseal the lawsuit in April.
That meant that CVS officials didn’t formally know the allegations or who filed the lawsuit until April.
Whistleblower advocates expressed concern that the acquisition by CVS could be bad for Behnke and affect the lawsuit. They said it’s unlikely, though, that CVS pursued the acquisition to choke off the lawsuit.
“I think if there is an acquisition by CVS, she has a reason to be concerned,” said James Mowery Jr., a Dublin-based lawyer whose firm specializes in whistleblower lawsuits. “She needs to be sure that her employer will always be Aetna, and she needs to be keeping a diary of everything that happens up until the acquisition.”
Mowery said the proposed acquisition makes the lawsuit a “significantly complex piece of litigation.”
Whistleblower Advocates, a whistleblower-lawyers firm based in Chicago, said that until the federal government demands to be a party in the suit, CVS will not feel pressure to address Behnke or her accusations.
Behnke said she took her concerns to corporate executives for Aetna and CVS Caremark in 2013, according to court records. Nothing happened.
Thomas said in the complaint she filed against CVS Caremark that the company was charging Aetna 25 to 40 percent more for drugs than its competitors.
Behnke also said that during meetings in February of 2013 with CVS officials to present her findings, CVS Vice President Allison Brown said Caremark had negotiated lower prices for those drugs but was not contractually obligated to show Aetna those prices.
Thomas called the exchange a “virtual admission of liability,” according to court records.
CVS Caremark officials also confirmed at those meetings that they had re-created Behnke’s analysis of drug prices and confirmed that she was accurate, according to court records. Behnke asked whether CVS Caremark could use the information to negotiate better prices for Aetna’s policyholders.
“Caremark defendants ... stated that improving or increasing the discounts Aetna received would adversely impact” CVS Caremark’s profits due to “retail contracting methodology,” according to court records.
In an email sent in July of 2013, Aetna’s head of its Medicare division marveled at how much money CVS Caremark was making on the “hidden spread.”
By September of 2013, Aetna indicated it would shop around for another PBM to see whether it could find better rates, according to the lawsuit.
CVS Caremark officials immediately offered to lower the costs of drugs for Aetna. When Aetna started shopping for a better deal, CVS Caremark offered an even steeper discount, according to the lawsuit.
Attorneys for CVS Caremark filed a motion April 20 to permanently seal the case again, saying the lawsuit would cause significant financial harm. The company’s attorney said Behnke provided sensitive information.
“These details concern the financial guarantees and pricing terms to which Caremark and Aetna agreed as well as financial terms allegedly offered during negotiations and data allegedly revealing specific prices paid by Aetna as well as Caremark’s performance on financial guarantees,” the motion read.
Behnke’s attorneys have until Friday to respond to the request to seal the case.