2009 Press Releases

Patients, Community Pharmacists Tell Federal Trade Commission of CVS/Caremark Merger's Costly Side Effects
Higher Prices, Less Privacy Cited in Request to Re-Examine the Merger
Alexandria, Va. - May 13, 2009

More than 80 community pharmacists from the National Community Pharmacists Association (NCPA) and several patients met with the Federal Trade Commission (FTC) today to discuss the negative impact of the March 2007 CVS/Caremark merger and to urge the FTC to re-examine it.

"Community pharmacists have received many complaints from patients about CVS Caremark's higher prices and questionable marketing practices," said Holly Whitcomb Henry, RPh, National Community Pharmacists Association (NCPA) President and Seattle, Washington pharmacy owner. "Despite CVS/Caremark's pre-merger promise to be 'agnostic as to where the consumer fills their prescription,' the company's mail-order and in-store sales and marketing teams tap into personal patient information and then aggressively use that information to steer them to CVS stores or Caremark mail order. That's anti-competitive and, ultimately, anti-consumer"

"Community pharmacy owners appreciate the FTC taking the time to hear directly from patients bearing the brunt of this merger. In the interests of consumers and fair competition, this merger deserves a fresh look," Henry added.

The combination of CVS, the nation's largest retail pharmacy, and Caremark, the nation's largest pharmacy benefits manager (PBM), has produced a prescription services giant. The resulting company operates more than 6,800 pharmacies, affects 134 million consumers and fills or manages 1.2 billion prescriptions annually—controlling or influencing the prescription benefit of an estimated 1 out of 3 Americans. With $9 billion in incremental earnings last year and a nearly $50 billion market cap, CVS Caremark has created a virtual monopoly limiting consumer options.

In Wednesday's meeting, the FTC heard from patients experiencing higher costs, fewer choices and less privacy since the merger took effect. Several examples follow below. Due to the potential for retaliation by CVS Caremark by excluding pharmacies from their network, the patient and pharmacy names have been withheld.

In New England, Pharmacist D. was appalled when his patient's co-pay on a monthly refill suddenly increased from approximately $5 to $50. When D. asked her if she knew why, he learned she had been receiving letters that said she would have to either pay a "penalty co-pay" or transfer her prescriptions to CVS retail or Caremark mail order. CVS Caremark was also requiring her to get a 3-month supply of a liquid drug which was much too heavy for the 94-year-old patient to lift. Instead, D. offered her the drug at cash price—less than half the price CVS Caremark wanted her to pay.

From Pharmacist K. in Wisconsin: "Today we attempted to fill a medication for a customer who needed it to coincide with her chemotherapy. Her plan does cover the medication but when we attempted to fill she was told it had to come from their [CVS Caremark] mail-order service. This delay will affect her chemo cycles and possibly her whole recovery."

A longtime patient of Pharmacist R. in Louisiana was shocked when her monthly refill was denied and the system claimed the drugs had already been processed—at a CVS pharmacy two towns over. When R. called to ask why the drugs had been filled at a different pharmacy without the patient's request, the CVS pharmacy refused to comment and only said, "We'll back them out [reverse the prescription claims]."

One North Carolina patient on a Medicare Part D plan operated by CVS Caremark switched his and his wife's prescriptions to CVS pharmacy in March 2009, expecting lower costs, as advertised. Instead, he had an extra $302 billed to his plan in pharmacy reimbursements, in addition to $12 in extra co-pay. At the local pharmacy, the plan paid a total of $11.08 for seven of their drugs; at CVS, it paid $313.17. These actions raised the government's payments by more than 2,800%, pushing seniors to the donut hole coverage gap sooner.

In today's meeting, NCPA urged the FTC to take a number of steps, including investigating allegations of anticompetitive and deceptive conduct by CVS Caremark; requiring CVS Caremark to treat all pharmacies in a nondiscriminatory fashion; and ensuring that the company creates an ironclad barrier between CVS and Caremark so that competitively sensitive Caremark information cannot be used by its retail operations.

Historically, the FTC reopens three to five mergers annually. In 1998, for example, the FTC investigated the Merck/Medco merger five years after its approval and found "the merger has made it possible for Medco to share with Merck sensitive pricing information it gets from Merck's competitors." The company signed a consent agreement to settle the FTC investigation, agreeing to refrain from sharing proprietary or other non-public information they receive from one another's competitors.

The FTC meeting is the latest step in NCPA's multi-pronged effort to shine a light of transparency on pharmacy benefit managers. Tasked by insurance companies with reducing overall prescription drug costs, the PBMs have put in place a byzantine, secretive drug payment system that has produced enormous PBM profits without commensurate consumer benefit. For example, patients are sometimes charged a higher co-payment for a lower-cost generic drug simply because the pricier medication boosts the PBM's bottom line.

On April 28, Bruce T. Roberts, RPh, NCPA Executive Vice President and CEO, wrote to the FTC urging the FTC to conduct a careful review of the proposed acquisition of Wellpoint's PBM by Express Scripts. In addition, NCPA officials are working with Congress to push for legislation to reform PBMs to ensure they are more transparent, accountable, and better serve patients. "The bedrock to sustainable and meaningful reform resides with the constructive legislative role Congress can play in reining in the PBM industry," Roberts said.

Conference Call on NCPA Concerns about CVS Caremark WAV (11M)

The National Community Pharmacists Association, founded in 1898, represents the nation's community pharmacists, including the owners of more than 23,000 pharmacies. The nation's independent pharmacies, independent pharmacy franchises, and independent chains dispense nearly half of the nation's retail prescription medicines. To learn more go to the NCPA Web site.