FTC Closes Investigation Into CVS Caremark Practices

WOONSOCKET, R.I. — The Federal Trade Commission (FTC) has closed a two-year investigation into pharmacy benefit management CVS Caremark's business practices, the drug store chain said on Friday.

While the FTC made no allegations of antitrust law violations or anti-competitive behavior, the agency alleged from 2007 until at least November 2008, CVS subsidiary Rx America posted incorrect prices for certain Medicare Part D prescription drugs at CVS and Walgreen Co. (WAG) pharmacies. The actual costs of some drugs were as much as 10 times higher than Rx America's posted rates, the commission said.

As a result, CVS Caremark under a consent order will pay $5 million in consumer refunds to compensate consumers who purchased coverage for the 2008 plan year from a Medicare Part D Prescription Drug Plan sponsored by Rx America. The fund is being established as a result of Rx America inadvertently posting on a website maintained by the Centers for Medicare and Medicaid Services (CMS) inaccurate pricing information for certain generic drugs. In addition, CVS Caremark agreed on a go forward basis to refrain from making any misrepresentations regarding drug pricing information relating to affiliate sponsored Medicare Part D plans. The consent order will be published in the Federal Register and is subject to comment for 30 days.

The National Community Pharmacists Association, and consumer groups, opposed the CVS acquisition of Caremark in 2007. In a statement, B. Douglas Hoey, NCPA chief executive officer, said, “We appreciate the FTC reviewing the evidence and concerns brought by NCPA, patients, members of Congress and others regarding anti-consumer, anticompetitive behavior by CVS Caremark. The investigation resulted in a multi-million dollar settlement of claims that CVS Caremark overcharged seniors and taxpayers and misled beneficiaries in its marketing of prescription drug plans on Medicare's Plan Finder Website. The settlement should also serve as a warning to any Medicare drug plan sponsors that have potentially misled seniors in their promotion of so-called 'preferred pharmacy' plans.

"At the same time, it is regrettable that the FTC's actions fell short of more robust protections for consumers and pharmacy competition, which are warranted in our view. NCPA provided to the agency what we believe to be compelling evidence, including one-sided contract terms with pharmacy small business owners, patient privacy concerns and a lack of transparency. Now more than ever, NCPA urges Congress and state legislatures to enact legislation, such as S.1058/H.R. 1971, that provides transparency and promotes pharmacy competition and consumer protections to address these types of questionable practices.”