CVS Caremark sued by Texas pharmacy owners

The drugstore giant formed by a 2007 merger faces allegations that it has an unfair competitive advantage and its marketing tactics violate consumer privacy rights.

By Pamela Lewis Dolan — Posted Oct. 21, 2010

Print  |   Email  |   Respond  |   Reprints  |   Like Facebook  |   Share Twitter  |   Tweet Linkedin

The latest fight against CVS Caremark by its competitors comes in a lawsuit filed by six independent pharmacy owners in Texas. The suit targets the company's alleged marketing tactics to physicians.

The plaintiffs, who are board members of American Pharmacies, a for-profit, member-owned pharmacy wholesale-buying group that is financing the lawsuit, claim that the 2007 merger between CVS Corp. and Caremark Rx created an unfair competitive environment with them and other competing pharmacies. The suit also claims CVS Caremark violated the privacy rights of its consumers by using data collected through its pharmacy benefit management division to market to doctors and patients.

The complaint says that through its PBM division, the company is able to mine information to identify physicians' prescribing practices as well as patient buying practices. With this information, the physicians are targeted to change their prescribing practices to include drugs that are favored by CVS Caremark, according to the suit (link).

Under terms of the merger agreement, the Federal Trade Commission required that the company maintain a "firewall" between its pharmacy and PBM businesses so that its competitors could conduct business on a level playing field. This suit and other complaints claim that the company either never established the firewall or intentionally circumvented it to create competitive gains over other pharmacies, including those owned by the plaintiffs in the Texas suit.

"The allegations made in the lawsuit largely mirror similar allegations made by the National Community Pharmacists Assn. and other well-funded independent pharmacy interest groups who have repeatedly mischaracterized CVS Caremark's business practices and made false allegations against the company," said Christine Cramer, director of public relations for CVS Caremark.

The FTC launched an investigation of CVS Caremark in fall 2009 at the urging of the NCPA. The organization said it had received several complaints that the merger of CVS and Caremark created conflicts of interest, and that the company was trying to steer business solely to its own stores. That investigation is ongoing. In May, the company acknowledged in an Securities and Exhange Commission filing that its business practices also were being probed by 24 states.

"We are confident that our business practices and service offerings, which are designed to reduce health care costs and expand consumer choice, are being conducted in compliance with applicable antitrust, privacy and other laws," Cramer said.

Back to top



Read story

Confronting bias against obese patients

Medical educators are starting to raise awareness about how weight-related stigma can impair patient-physician communication and the treatment of obesity. Read story

Read story


American Medical News is ceasing publication after 55 years of serving physicians by keeping them informed of their rapidly changing profession. Read story

Read story

Policing medical practice employees after work

Doctors can try to regulate staff actions outside the office, but they must watch what they try to stamp out and how they do it. Read story

Read story

Diabetes prevention: Set on a course for lifestyle change

The YMCA's evidence-based program is helping prediabetic patients eat right, get active and lose weight. Read story

Read story

Medicaid's muddled preventive care picture

The health system reform law promises no-cost coverage of a lengthy list of screenings and other prevention services, but some beneficiaries still might miss out. Read story

Read story

How to get tax breaks for your medical practice

Federal, state and local governments offer doctors incentives because practices are recognized as economic engines. But physicians must know how and where to find them. Read story

Read story

Advance pay ACOs: A down payment on Medicare's future

Accountable care organizations that pay doctors up-front bring practice improvements, but it's unclear yet if program actuaries will see a return on investment. Read story

Read story

Physician liability: Your team, your legal risk

When health care team members drop the ball, it's often doctors who end up in court. How can physicians improve such care and avoid risks? Read story

  • Stay informed
  • Twitter
  • Facebook
  • RSS
  • LinkedIn