New CVS Controversy

Connecticut's Attorney General is investigating CVS' threat to drop a drug discount program because state law requires the lowest drug prices be for the state's Medicaid program.

[Attorney General Richard] Blumenthal, in cooperation with Department of Consumer Protection commissioner Jerry Farrell, Jr., has sent CVS Caremark a subpoena to explain why providing the discounts to the state Medicaid program would result in termination of its Health Savings Pass program in Connecticut and other information. The deadline for compliance is July 9.

In response to the matter, CVS Caremark said that it intends to "fully comply with all applicable legal requirements in this matter" and "will fully cooperate with the Attorney General's investigation."

CVS Caremark Editorial

Joseph Harmison, President of the National Community Pharmacists Association (NCPA), has an op-ed on The Hill website. In his piece, he praises the efforts of the Federal Trade Commission (FTC) and the many states investigating the unfair business practices of CVS Caremark.

In his piece, he names a group of bipartisan Senators and Representatives who have written letters on their constituents, both patients and pharmacists, behalf to the FTC. The Senators and Representatives include:

U.S. Senators Sherrod Brown (D-Ohio), Byron Dorgan (D-N.D.), Russ Feingold (D-Wis.), Amy Klobuchar (D-Minn.), Frank Lautenberg (D-N.J.), Mark Pryor (D-Ark.) and Roger Wicker (R-Miss.), and U.S. Representatives Michael Acuri (D-N.Y.), Robert Aderholt (R-Ala.), Marion Berry (D-Ark.), Jo Bonner (R-Ala.), John Boozman (R-Ark.), Judy Chu (D-Calif.), Lloyd Doggett (D-Texas), Jim Gerlach (R-Pa.), Walter Jones (R-N.C.), Larry Kissell (D-N.C.), Robert Latta (R-Ohio), Michael Rogers (R-Ala.), Linda Sanchez (D-Calif.), Jan Schakowsky (D-Ill.) and Anthony Weiner (D-N.Y.)

Note that this list of Senators and Representatives who have written to the FTC in support of their investigation does not include anyone from the State of Michigan. Contact your Senators and Representatives and remind them of how important it is to ensure fair business practices for everyone, not just the big corporations.

Tell them that you will watch how they act on this and take it into account when you are asked for campaign contributions or your vote.

In their letters, the Congressmen and women argued for,

“the FTC to reopen the CVS Caremark merger investigation and determine if the acquisition poses a threat of reducing competition or whether CVS is engaging in any unfair or deceptive business practices.”

Listed in Mr. Harmison's piece are these familiar problems,

This month, community pharmacists renewed the case against CVS Caremark and presented additional evidence to the enforcement agency. On one occasion, NCPA detailed CVS Caremark tactics that secretly boost the costs to health plans and profitability of its mail order pharmacy. Also brought to the FTC’s attention is how aggressive auditing is used to recoup funds from community pharmacies on minor technicalities.

CVS Caremark Lobbying Numbers

Businessweek has the numbers for CVS Caremark's lobbying.

$1.98 million in only the first quarter.

Its lobbying interests included changes to Medicare and Medicaid programs that were made as part of the health care overhaul. Those included the elimination of the "donut hole" coverage gap in the Medicare Part D drug benefit. CVS also discussed reimbursement rates for generic drugs, changes in coverage, and regulation on generic biologic drugs.

The company lobbied on antitrust legislation, along with disclosure requirements, employment, and training, and the Federal Employees Health Benefits Program.

Lansing Sues Retail Pharmacies

The City of Lansing is suing several retail pharmacies. It accuses the stores of violating a state law that covers the sale of generic drugs and overcharged city workers.

...city attorney Brig Smith alleged that Walgreens, CVS and Rite Aid violated a law that exists in three states, including Michigan, and restricts the amount of profits that retail pharmacies can collect from generic drugs.

Sheepdogs Back on Duty

I was hoping that a Democratic President could change the culture of the executive agencies that had neglected their responsibilities to protect the public from predatory monopolistic corporations for more than eight years. I was beginning to lose hope. Then the following news was released.

CVS Caremark has come under criticism from various groups and lawmakers who have asked the FTC [Federal Trade Commission] to review the nearly $27 billion merger of a major drug-store chain and large pharmacy benefits manager that formed the company in March 2007.

In June, the FTC said it was referring to its Bureau of Competition a national independent pharmacists group's concerns that CVS Caremark's pharmacy-benefits-management operation, or PBM, had improperly shared patient information with the company's retail side to steer customers to CVS stores, to the detriment of competitors and customers.

The National Community Pharmacists Association called on the FTC to reopen the CVS Caremark merger, claiming the company engaged in anticompetitive behavior. State legislators and members of Congress this year also asked the FTC for a review.

In May, the National Legislative Association on Prescription Drug Prices, a nonprofit directed by state legislators, encouraged the FTC to open an investigation into CVS's acquisition of Caremark Rx "and the activities and conduct of the firm since the merger." The legislative group said CVS Caremark's conduct threatens to harm consumers by increasing prices and decreasing service and convenience.

While community pharmacists and lawmakers voice concerns that CVS Caremark has improperly wielded its power as a combined drug retailer and PBM, the company has had trouble keeping and winning PBM clients, a situation made clear Thursday as Chief Executive Tom Ryan said the company had some "big client losses" for 2010.

The client news sent CVS shares down nearly 21%, or $7.50, to $28.65, and left some Wall Street analysts questioning the company's retail-PBM business model.

Whether or not CVS Caremark is guilty of the allegations is to be determined. But I am greatly encouraged to see the FTC is back in the business of investigating violations of predatory corporate activities.

I has always struck me as inherently objectionable when a fox is allowed to guard a chicken, much less over the entire chicken coop. We citizens are essentially sheep at the mercy of large corporate wolves. It is a delight to see that sheepdogs are back.