CVS settles overcharge allegations
Older customers paid too much, gov’t claimed
After more than two years of investigation, CVS Caremark agreed on Thursday to pay $5 million to settle charges by the Federal Trade Commission that the company had misrepresented the price of certain prescription drugs in one of its Medicare drug plans.
The misrepresentation, the F TC said, caused many older consumers to pay significantly higher prices than advertised.
The settlement comes at a time of intensive government scrutiny of pharmacy benefits managers like CVS Caremark, companies that manage prescription drug plans for employers and insurers.
With CVS Caremark, the agency looked into whether the merger of one of the largest drugstore chains with one of the largest pharmacy benefits managers had given the company an unfair market advantage in steering customers and obtaining information about competing pharmacies.
In 2009, some legislators, labor unions, pharmacies and consumer groups raised concerns about potentially anti- competitive and anti- consumer business practices by CVS Caremark. The F TC opened an investigation early that year.
On Thursday, the agency dismissed the more serious allegations. The agency found only one violation — that one of the company’s Medicare drug plans, then called Rxamerica, had misled some consumers about drug prices.
The agency’s decision removes a significant overhang for the company. In 2006, when CVS proposed to merge with Caremark, executives pledged that the new company would put up a firewall to keep the activities of its own stores separate from the benefits manager.
But pharmacies and consumer groups alleged in their complaints to regulators that the two divisions of the company had shared consumers’ records, steering people to the company’s own retail stores and mail- order operations.
The F TC mounted a sweeping investigation. But the agency ultimately cited CVS Caremark for only one narrow violation.
The agency charged that from 2007 through at least the end of November 2008, the Rxamerica plan posted on its website and sup- plied to some third-party websites showed incorrect prices for Medicare Part D prescription drugs at two pharmacy chains, CVS and Walgreens.
The posted prices caused many people to choose the CVS Caremark plan and pay as much as 10 times more than they had expected, according to the F TC complaint.
The settlement requires CVS Caremark to pay $5 million to reimburse consumers for the price difference and bars the company from making deceptive claims about drug prices. The agency said it plans to mail checks to consumers who were deceived.