According to a report in the Los Angeles Times, which quotes an unnamed official with knowledge of the matter, the Office of the Inspector General (OIG) for the U.S. Department of Health and Human Services is investigating such allegations as part of efforts to stem fraud against the government's Medicare health plan for the elderly. link.reuters.com/wyp33t

A spokesman for the OIG said he could not confirm or deny the existence of any investigation.

CVS, which runs both a major U.S. pharmacy chain and a large pharmacy benefits management business, said its programs require that a patient's consent be obtained before a prescription is filled.

"At this time, we have not been contacted by OIG in regard to an investigation," said CVS spokesman Mike DeAngelis. "The LA Times reported this based on an unnamed source."

CVS reached a $17.5 million settlement last year involving allegations that it inflated prescription claims to the government's Medicaid program for the poor in 10 states.

Drugstore customers often sign up for programs that allow a pharmacy to refill prescriptions on a regular basis or have the company call to ask if a refill is wanted.

"In our opinion, it is a far stretch to assume that CVS would knowingly 'cheat' third-party payers by routinely accepting reimbursement for medications never picked up by customers," said SunTrust analyst David Magee.

He did note that some customers are notified by CVS that refills were ready even before such a request was made.

"Presumably, customers have given prior approval of this practice ... which was mostly done in the spirit of customer service and drug adherence goals," Magee said. "While the automatic refill practice appears to be more than regional, any wrongdoing was likely unintentional and we would be surprised if this issue amounts to much."

CVS shares fell 1.1 percent to close $47.08 in trading on Friday, a steeper decline than the broader U.S. stock market.

CVS Caremark also agreed to pay $5 million in January to settle charges it inaccurately priced some drugs for the elderly and the disabled, ending a wide-ranging, multi-year investigation into its business practices.

(Reporting by Neha Alawadhi in Bangalore, Jessica Wohl in Chicago and David Morgan in Washington; Editing by Ted Kerr, Michele Gershberg)

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