CVS to Pay $37.76 Million to Resolve Federal Allegations of Over-Dispensing Insulin Pens

The US Attorney’s Office for the Southern District of New York has announced a $37.76 million settlement with CVS Pharmacy, Inc. to resolve allegations that the company violated the False Claims Act by over-dispensing insulin pens and improperly billing federal health care programs.

The settlement, approved by US District Judge John G. Koeltl, includes $24.4 million to be paid to the United States, with the remaining funds distributed to participating states.

CVS admitted to dispensing more insulin to patients than prescribed, submitting premature refill claims, and under-reporting days-of-supply data to secure reimbursements from Medicare, Medicaid, TRICARE, and the Federal Employees Health Benefits Program.

Findings and Admissions

According to the US Attorney’s Office, the conduct occurred between 2010 and 2020. During that period, CVS pharmacies:

• Dispensed quantities of insulin exceeding prescription directions.
• Refilled prescriptions prematurely, before patients had used prior supplies.
• Reported inaccurate days-of-supply on reimbursement claims, preventing pharmacy benefit managers (PBMs) from detecting early refills.
• Failed to follow PBM rules requiring overrides or resubmissions with accurate supply data.

CVS management was aware of audit findings showing violations related to premature refills and inaccurate reporting but did not implement adequate corrective actions during the covered period.

CVS admitted that its pharmacies sometimes did not break open insulin pen cartons, leading to dispensing amounts beyond plan limits, and that its auto-refill system occasionally generated premature refill notifications based on inaccurate supply data.

Statements from Federal Officials

US Attorney Jay Clayton described CVS’s conduct as a “decade-long practice of repeatedly prematurely refilling insulin prescriptions”, noting that the company’s failure to follow appropriate refill schedules increased costs for government programs and wasted taxpayer funds.

He emphasized that the settlement “reflects our continued commitment to holding pharmacies to account, enforcing rules designed to keep costs down, and protecting taxpayer dollars.”

Officials from the HHS Office of Inspector General (HHS-OIG), the Defense Criminal Investigative Service (DCIS), and the Office of Personnel Management OIG (OPM-OIG) underscored the importance of compliance with federal billing standards:

• HHS-OIG’s Naomi D. Gruchacz stated that federal health programs depend on accurate billing and responsible reimbursement practices.
• DCIS Acting Special Agent in Charge Christopher M. Silvestro reaffirmed that investigating false claims against TRICARE remains a top priority.
• OPM-OIG Special Agent in Charge Derek M. Holt noted that false claims for unnecessary insulin refills “exploit benefits that federal employees rely on to manage their health.”

Background on Insulin Dispensing Practices

The case centered on insulin pens, which are packaged in five-pen cartons, each containing 300 units of insulin. Pharmacies are required to report the quantity dispensed and days-of-supply when seeking reimbursement.

Government health care programs and PBMs limit the days-of-supply that can be billed (often 30 days) and deny premature refill claims. These safeguards depend on accurate pharmacy reporting.

The government alleged that CVS manipulated or misreported supply data, which prevented PBMs from detecting violations. The result was over-dispensing, leading some patients to accumulate unused and potentially expired insulin.

Resolution and Oversight

As part of the settlement, CVS admitted to the conduct alleged in the government’s complaint and accepted responsibility. The company will pay $37.76 million in total.

The government’s case was handled by the Civil Frauds Unit of the US Attorney’s Office, led by Assistant US Attorney Pierre Armand, with investigative support from HHS-OIG, DCIS, OPM-OIG, the Department of Veterans Affairs OIG, and the US Postal Service OIG.

In addition to the government’s complaint, five private whistleblower lawsuits were joined under the False Claims Act.

Key Takeaways

• Settlement Amount: $37.76 million
• Allegation: False Claims Act violations related to over-dispensing insulin pens
• Covered Period: 2010–2020
• Programs Involved: Medicare, Medicaid, TRICARE, Federal Employees Health Benefits Program Lead
• Agency: US Attorney’s Office, Southern District of New York
• Case Oversight: Judge John G. Koeltl

Reference

U.S. attorney announces $37.76 million settlement with CVS for over-dispensing insulin pens to patients. U.S. Attorney's Office. SO District of NY. Press release. Published December 2, 2025. Accessed December 5, 2025. https://www.justice.gov/usao-sdny/pr/us-attorney-announces-3776-million-settlement-cvs-over-dispensing-insulin-pens