Taken together, these matters demonstrate a renewed focus on pharmacy-related fraud. And while the financial recoveries differ dramatically, from hundreds of millions against national chains to a six-figure settlement against a small, independent pharmacy, the message is the same: Pharmacies and PBMs sit squarely in the DOJ’s enforcement sights.

The Rise of FCA Enforcement Against Pharmacies and PBMs

For years, the FCA has been the DOJ’s primary enforcement tool to cure, punish, and deter healthcare fraud. The FCA’s treble damages provision and statutory penalties give the government heightened leverage to secure settlements across the healthcare spectrum. With respect to pharmaceuticals, DOJ’s enforcement strategies have traditionally centered on pharmaceutical manufacturers. In the early 2000s, DOJ announced a series of high-dollar settlements with Pfizer, GlaxoSmithKline, and Johnson & Johnson over off-label marketing, kickbacks, and inflated average wholesale price (AWP) reporting. In those days, pharmacies and PBMs were viewed as downstream implementers of manufacturer and payor policies. However, opioid-era initiatives in the late 2010s reshaped that perception: the DOJ increasingly began treating PBMs and pharmacies as gatekeepers whose pricing, formulary, and dispensing decisions directly influenced government spend, with Medicare Part D drawing particular scrutiny. To be sure, the Centers for Medicare and Medicaid Services (CMS) depend on PBMs for accurate pricing benchmarks and on pharmacies to ensure prescriptions are valid, lawful, and medically necessary.

In the most common iteration, PBMs are accused of violating the FCA by padding the drug prices they submit or cause to be submitted to Medicare and Medicaid, so the numbers do not match what pharmacies are actually paid or what patients actually pay for drugs at the point of sale. These claims may allege actual falsity (that the PBM caused the submission of a claim for reimbursement that was not factually accurate) or implied false certification (that the PBM accepted reimbursement from federal programs on the premise that it was complying with pricing and reporting rules, when it was not). [7] Either way, the essence of the allegation is that the PBMs are profiting from knowingly causing federal healthcare programs to pay more than they should for prescription drugs.

In response, PBMs typically contest falsity by arguing that when reporting paid amounts to CMS, their contracts and the relevant regulatory guidance allow them to report the rates as they do. They also typically contest that they did not “knowingly” submit false claims since prices are set (often by automated systems) in a complex environment with plans, pharmacies, and regulators all involved. Therefore, errors and inaccuracies may arise, but they do not constitute fraud. Whatever the outcome, PBMs are correct that these are highly nuanced and complex regulatory environments, and PBM liability for claims of this nature is rarely a foregone conclusion.

The DOJ’s recent announcement that “drug, device or biologics pricing” is a new priority enforcement area, with specific attention to “arrangements for discounts, rebates, service fees, and formulary placement and price reporting,” is evidence enough that a new era of PBM enforcement may be upon us. Further, this year’s settlements and judgments against Caremark, Walgreens, and independent pharmacies indicate that enforcement will not be limited to the highest tiers of the pharmaceutical supply chain. Enforcement authorities and private whistleblowers alike can be expected to scrutinize every link in the pharmaceutical chain for impacts to federal healthcare programs, with particular focus on the financial relationships among manufacturers, PBMs, and pharmacies, which shape coverage, pricing, and government billing. This DOJ focus sits within a wider policy push, echoing Federal Trade Commission (FTC) and CMS examinations of PBM transparency and bipartisan congressional hearings on rebate structures.

Key Recent Cases

CVS Caremark – Inflated Medicare Part D Pricing

The Caremark case is perhaps the most significant PBM enforcement action in history. In this action, the relator (the former head actuary for Medicare Part D at Aetna) alleged that from 2010 to 2016, Caremark submitted inflated prescription drug pricing data to Medicare Part D. Central to the relator’s theory of liability was that Caremark was maximizing its profits through spread pricing (charging an insurer more for a drug than they reimburse the pharmacy) at the expense of Medicare Part D. After an eight-day bench trial, the court agreed, relying on Caremark’s contracts, expert analysis, internal emails, CMS rule materials, and employee testimony to show that Caremark understood the CMS rules yet deliberately designed and concealed an offsetting strategy to earn hidden spread on Part D claims. The court found Caremark to be liable for a $290 million judgment, marking one of the largest FCA judgments ever against a PBM. CVS Caremark contests the court’s findings and is appealing the judgment.

Walgreens – Opioid Dispensing Settlement

When Walgreens agreed to pay $300 million to resolve allegations that it dispensed opioids without valid prescriptions and billed federal healthcare programs for the drugs, it found itself at the center of two well-established themes of DOJ healthcare enforcement: (1) scrutiny of opioid prescriptions under the Controlled Substances Act (CSA) and (2) scrutiny of billing for medically unnecessary healthcare services and prescriptions under the FCA. By framing CSA violations as the basis for false claims, DOJ has expanded the FCA’s reach into what were once primarily regulatory or licensing matters. Although the opioid crisis is dissipating, illegal opioid prescriptions remain a top DOJ oversight priority, and this case shows how retail pharmacies can face twin exposure under the CSA and the FCA. The DOJ has increasingly framed CSA violations as false certifications of compliance—arguing that claims submitted while ignoring “corresponding responsibility” and other CSA duties are impliedly false and thus actionable under the FCA.

Allentown Pharmacy – Billing for Undispensed Drugs

The $825,000 settlement with a small Pennsylvania pharmacy may seem modest in comparison to the Caremark and Walgreens matters, but it serves as a reminder that no healthcare provider or pharmacy is too small to be at the center of a federal investigation. In this case, the DOJ alleged that the pharmacy billed Medicare for drugs it never dispensed. Notably (and as highlighted in the U.S. Attorney’s Office press release), this settlement was preceded by a number of similar settlements against local pharmacies in recent years and reflects an emerging pattern, not an anomaly. By targeting such matters, DOJ signals that local, independent pharmacies must adhere to the same compliance standards as national chains.

Compliance Takeaways

Strengthening PBM Data Controls

With new and likely enhanced regulatory scrutiny, PBMs should prioritize internal controls around data reporting. This includes creating clear audit trails for all pricing submissions, ensuring that prices are accurately captured, and documenting how benchmark data is derived. Independent review of pricing methodologies can help demonstrate good-faith compliance. Just as importantly, boards and senior executives should own data governance, assigning clear accountability (e.g., through the audit/compliance committee), integrating data risk into enterprise risk management, and receiving regular, metrics-driven reporting. The Caremark litigation makes clear that data reporting is no longer a technical back-office task but a high-risk area demanding rigorous governance and meaningful oversight.

Enhancing Pharmacy Dispensing Protocols

In the same vein, retail pharmacies should strengthen dispensing protocols—particularly around opioids and other controlled substances. Red-flag detection systems, including algorithms that reveal high-risk prescribing patterns, should be robust, well-documented, and consistently applied. Staff training, pharmacist oversight, whistleblower channels, and escalation procedures are essential. Pharmacies should treat CSA compliance as integral to FCA risk management: maintain strong diversion-control programs and document refusal-to-fill decisions. Finally, AI-driven refill tools and algorithmic prescription screening introduce new FCA exposure if they’re poorly tuned or unmonitored. Pharmacies should use human-in-the-loop review, audit logs, and periodic model validation to catch errors that could be framed as “knowing” submission of false claims.

Conducting Targeted Compliance Audits

Health systems should conduct targeted compliance audits of their pharmaceutical reimbursement practices—examining pricing, prior authorization workflows, auto-refill policies, and controlled-substance dispensing. By proactively identifying gaps, entities can mitigate FCA exposure and position themselves better if issues arise, and the DOJ has welcomed self-disclosure and voluntary remediation. For multi-state operators, remember that many states now deploy their own False Claims Acts and Medicaid Fraud Control Units (MFCUs), creating parallel state–federal risk across Medicaid managed care and pharmacy programs. Health systems should develop audit and remediation plans with this dual track in mind, including playbooks for coordinated disclosures to both federal and state authorities.

Anticipating Increased Enforcement

By centering drug pricing in its refreshed healthcare fraud priorities, the DOJ is poised to push deeper into specific PBM and pharmacy risk areas. Expect scrutiny of rebate structures and spread pricing, pharmacy contract arrangements, prior-authorization rules, and algorithmic pricing and dispensing controls. Pharmacies and PBMs should anticipate continued data mining of Medicare and Medicaid claims, whistleblower-driven theories, and parallel tracks with DEA and state regulators. Recent matters spanning both national chains and independent pharmacies suggest the next wave will test these program designs and their documentation, not just isolated billing errors.

Conclusion

Pharmacies and PBMs now find themselves in the same enforcement spotlight long trained on pharmaceutical manufacturers. Recent FCA matters show the government’s willingness to pursue both national players and small independents, deploying theories from pricing-data manipulation to opioid-dispensing failures. The Caremark judgment and Walgreens settlement serve as bookends—one highlighting PBM pricing risk, the other retail pharmacy dispensing risk—and the Allentown pharmacy settlement underscores that no case is too small. Crucially, durable compliance turns on a culture of ethical accountability and transparency, not merely on technical controls or paperwork.

The compliance implications are clear: PBMs must treat pricing-data submissions as high-risk functions, pharmacies must strengthen dispensing protocols, and all entities should conduct targeted compliance audits. With DOJ signaling sustained, data-driven enforcement, the pharmacy and PBM sectors must embrace a culture of compliance commensurate with the stakes. And critically, this is not isolated enforcement—these actions align with a broader federal push across HHS, CMS, FTC, and Congress to advance drug affordability, pricing transparency, and public trust in the drug-pricing ecosystem.

1. Press Release, U.S. Dep’t of Just., Office of Pub. Affs., Walgreens Agrees to Pay Up to $350M for Illegally Filling Unlawful Opioid Prescriptions and for Submitting False Claims to the Federal Government (Apr. 21, 2025), https://www.justice.gov/opa/pr/walgreens-agrees-pay-350m-illegally-filling-unlawful-opioid-prescriptions-and-submitting (last visited November 11, 2025).

    

2.  

   Jonathan Stempel, CVS Unit Ordered to Pay $95 Million in Medicare Whistleblower Lawsuit, Reuters (June 26, 2025), https://www.reuters.com/legal/government/cvs-unit-ordered-pay-95-million-medicare-whistleblower-lawsuit-2025-06-26 (last visited November 11, 2025).

    

3.  

   Although the DOJ declined to intervene in the Caremark case in 2018, the court’s judgment is likely to encourage similar suits from relators.

    

4.  

   Press Release, U.S. Dep’t of Just., Office of Pub. Affs., National Health Care Fraud Takedown Results in 324 Defendants Charged in Connection with Over $14.6 Billion in Alleged Fraud (June 30, 2025), https://www.justice.gov/opa/pr/national-health-care-fraud-takedown-results-324-defendants-charged-connection-over-146 (last visited November 11, 2025).

    

5.  

   Press Release, U.S. Dep’t of Just., Office of Pub. Affs., DOJ–HHS False Claims Act Working Group (July 2, 2025), https://www.justice.gov/opa/pr/doj-hhs-false-claims-act-working-group (last visited November 11, 2025).

    

6.  

   Press Release, U.S. Att’y’s Off. for the E. Dist. of Pa., Allentown-Area Pharmacy and Its Owner Agree to Pay $825,000 to Resolve Allegations of False Claims Act Liability (Aug. 8, 2025), https://www.justice.gov/usao-edpa/pr/allentown-area-pharmacy-and-its-owner-agree-pay-825000-resolve-allegations-false (last visited November 11, 2025).

    

7.  

   This theory was first recognized by the Supreme Court in Universal Health Servs., Inc. v. United States ex rel. Escobar, 579 U.S. 176 (2016). Since that time, the implied false certification theory has emerged as a leading generator of FCA theories, both from relators and from DOJ.