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 Investigation

CVS continues to run into problems. The company revealed that it is under investigation in 24 states because of its business practices. A primary focus of the investigation is whether CVS gave incentives for customers to transfer their prescriptions to CVS.

CVS Caremark Corp., the largest U.S. provider of prescription drugs, said its business practices are under investigation by 24 states.

The probe is similar to one that was started by the U.S. Federal Trade Commission last year, CVS said in a filing today. The District of Columbia and county of Los Angeles are also participating in the investigation, according to the filing. CVS said it’s cooperating with the investigations.

A multistate task force is reviewing the relationship and practices of CVS and Caremark following their 2007 merger, Connecticut Attorney General Richard Blumenthal said in March. The offices of the attorneys general of Illinois and Florida also confirmed in March that they were taking part in the investigation.

CVS also said it received a subpoena from the Office of Inspector General within the U.S. Department of Health and Human Services for information on incentives for customers to transfer their prescriptions to CVS’s pharmacies. Offers included gift cards, cash, non-prescription goods and coupons, according to the filing with the Securities and Exchange Commission.

FTC Ban on 'Pay to Delay'?

According to the USA Today, the FTC wants to ban drug companies from paying to delay generic alternatives.

Agency officials estimate the deals cost American consumers $3.5 billion per year in unnecessarily high drug prices.

The FTC advocates making this ban in the healthcare reform bills being negotiated.

Another Wrinkle in the CVS-Caremark Story

The Wall Street Journal had an article in yesterday's paper reporting another wrinkle in the CVS-Caremark story.

Coventry Health, which is moving more than $1 billion a year worth of pharmacy-benefits-management business from CVS Caremark to a rival PBM, accuses the company of wrongfully paying hundreds of thousands of dollars or more in prescription drug claims.

The Coventry Health account is one of several "big client losses" amounting to a net $4.8 billion in erased business for next year that CVS Caremark discussed with investors last week. While investors already knew about some of the lost accounts, including Coventry, there were more than expected, and CVS stock swooned on renewed concerns about the company's hybrid drug retailer-PBM business model.

In a breach-of-contract lawsuit filed against CVS Caremark in September and moved to a U.S. district in Tennessee last month, Coventry alleges that Caremark incorrectly paid numerous drug claims to Coventry members that it should have denied.

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.