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CVS pharmacy rewards

If an Illinois man gets his way, you could be paying full price at CVS a lot more often. He wants the drug store chain to stop offering coupons that he says are “illegal kickbacks”.

The basis of his complaint is CVS’ ExtraCare Pharmacy and Health Rewards. For every 10 prescriptions you fill at CVS, you can earn $5 in ExtraBucks Rewards that will give you a discount on just about any purchase in the store.

Richard Carmel took advantage of the offer to save $5 on his purchases.

And then he sued CVS.

Carmel alleges that the $5 coupon offer is an illegal discount, because CVS also offers it to Medicare and Medicaid recipients. CVS should be reimbursing the federal programs, he argues, instead of charging them full price and giving $5 kickbacks to customers.

CVS has now formally responded to Carmel’s federal lawsuit, which was originally filed shortly after CVS’ program debuted in 2013. The drug store chain submitted a motion to dismiss the suit last week, saying essentially – hey, it’s only five bucks.

The $5 discount is of “nominal value” as defined by federal law, CVS insists. The federal Anti-Kickback Statute prohibits offering “incentives” to induce someone to buy anything that’s reimbursable under a federal health care program. But the statute doesn’t kick in until an incentive’s value is greater than $10, or if it surpasses an annual $50 total – precisely the limit CVS has on its rewards program. So CVS says Carmel’s complaint is baseless.

This isn’t the first time a pharmacy rewards program has come under fire, though. Several Canadian provinces ban pharmacy rewards altogether. Regulators there argue that there’s something unseemly and unethical about offering coupons and other rewards for buying medicine. It turns pharmacists into hucksters, they say, and it could be dangerous – what if customers keep refilling prescriptions they no longer need, at no out-of-pocket cost to themselves, just so they can keep collecting coupons, points and perks?

In Carmel’s case, it’s not about ethics, but money that he says the federal government is owed. So why would he be suing CVS, if he’s not even the victim?

In legal terms, he’s identified himself as a relator filing a qui tam action. In layman’s terms, that essentially means he’s suing as a citizen, on behalf of the federal government. And if he wins the case, he gets a cut of whatever damages the government is granted.

The judge is set to rule in June on whether to grant CVS’ motion to dismiss the case, or allow it to proceed. If she ultimately ends up ruling in Carmel’s favor, he stands to earn enough money that he, for one, won’t even miss those $5 coupons.

4 Comments

  1. If this man though it was so wrong, then why did he use the coupons. Also other people who are not on any government program (Medicaid or Medicare) also do this, why deny them the opportunity to save money. Just like some people want to sue for everything. I hope is thrown out of court with this nonsense.

    • I’ve tried using coupons on medications that only have a $5 or $6 copay…I’ve been told I still have to pay the copay because it’s dictated by the insurance – not them…I can use a coupon, but it comes off the price of the medication – to the benefit of the insurance company – and not off the copay. If CVS to wants to offer ecbs for filling the prescriptions, can they use it on insurance copay.

  2. I think he has a good point. The Feds should have beaten him to the punch by directly taking the issue up with CVS. I hope he prevails, as taxpayers are being ripped off. It’s no different than the fraud perpetrated on insurance carriers when drug manufacturers give consumer incentives to buy their expensive brand-name prescription drugs rather than generics.

    • Except that the Feds *have* taken on the issue directly, in the form of legislation / regulatory oversight provided by the Anti Kickback Statute cited in the piece. Of which Carmel was clearly unaware. (and you) (and me) (and most everybody else before reading this article)

      But no, keep suing over nebulous “illegal kickbacks.” This is our wonderful, informed electorate in action. SUE! SUE EVERYBODY!

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