About half the settlement money must be used to benefit low-income, disabled, or elderly customers who buy prescription drugs, Corbett said in a statement today. The money will be used to promote lower drug costs and to educate people about cost differences among medications.

“Caremark was operating against their clients’ interests by retaining rebates and discounts that they were obligated to pass on to their clients,” Corbett said. “This agreement stops the deceptive business practices and takes the necessary steps to protect health plans and patients.”

Pharmacy benefit managers enter into contracts with employers and government health plans that offer prescription drug benefits to process claims for medications provided to patients enrolled in the health plans.

PBMs use their buying power to obtain volume discounts and rebates from drug manufacturers and to negotiate discounts with retail pharmacies that dispense the drugs. The PBMs then pass these savings on to their clients and dispense drugs through their own mail-order systems to health plan enrollees.

Massachusetts, Connecticut and Vermont are the only New England states included in the settlement.

“The company has agreed to enter into the settlement to confirm its continued commitment to compliance with state consumer protection laws in serving the pharmacy benefit needs of its PBM clients and their participants and to avoid the uncertainty and expense of the investigation,” CVS said in a statement issued yesterday.

Caremark set aside money to pay the settlement fees prior to the Tennessee company’s purchase by CVS Corp., according to the CVS Caremark statement. The settlement will not affect CVS Caremark’s financial results this year.