FTC investigating CVS Caremark business practices

The agency is focusing on whether the pharmacy benefit management division might be steering patient transactions solely to the company's stores.

By Pamela Lewis Dolan — Posted Nov. 25, 2009

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The Federal Trade Commission is examining the business dealings of CVS Caremark after getting complaints from several congressmen, pharmacists and patients.

At the heart of the complaints is the 2007 merger between CVS and the pharmacy benefit manager Caremark. Critics say the merger may have resulted in a conflict of interest. The FTC was asked to investigate claims that the Caremark branch of the business was making it hard for its members to buy prescription drugs from non-CVS pharmacies.

In a statement e-mailed to American Medical News, CVS Caremark acknowledged that it was being investigated but refuted the claims.

"The company is not able to predict with certainty the timing, outcome or consequence of the investigation," wrote spokeswoman Carolyn Castel. "However, it remains confident that its business practices and service offerings (which are designed to reduce health care costs and expand consumer choice) are being conducted in compliance with the antitrust laws."

The National Community Pharmacists Assn., which represents independent and small pharmacies, said it supports the investigation.

"Patients consistently complain of higher prices, fewer choices and privacy violations. Patients cite steep penalties for choosing other pharmacies, if they're allowed a choice at all. Aggressive marketing tactics tap into vast databases of private medical records. Meaningful competition has been severely diminished," the NCPA said in its statement.

The NCPA said it documented more than 300 complaints from patients and pharmacists about the company's business practices.

CVS and Caremark merged in 2007 in a deal worth $27 billion. CVS operates more than 6,200 pharmacies across the country, while Caremark manages the pharmacy benefits of more than 130 million people. In a letter to the FTC asking for an investigation, U.S. Rep. Larry Kissell (D, N.C.) said he wanted to know if the merger "has led to significant harm to consumers and small businesses."

Kissell was among several members of Congress who wrote letters asking the FTC to investigate the merger.

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