FTC asked to probe CVS on prescription drug prices


July 15, 2010 Updated May 7, 2009 at 3:02 PM CDT

WASHINGTON (Reuters) - An association of state
lawmakers concerned about drug prices asked the Federal
Trade Commission Thursday to take another look at its
approval of CVS's 2007 purchase of Caremark, saying
there was evidence of "harmful and deceptive conduct."

The National Legislative Association on Prescription Drug
Prices alleged that pharmacy benefit managers, or PBMs,
associated with CVS Caremark took rebates from manufacturers
and did not pass them on to customers; suggested different,
more expensive drugs and negotiated with employers and
pharmacies separately, pocketing the difference.

"One investigation found that a PBM charged an employer
$215 for a generic prescription but paid the pharmacy only $15.
The PBM pocketed the $200 spread at the expense of the
employer," the group said in a letter to FTC Chairman Jon

CVS said the group "has it exactly backwards."

"The merger of CVS and Caremark is, in fact, making
pharmacy health care more accessible, more effective and more
affordable. Our integrated pharmacy and PBM operations provide
greater choice and more convenience for patients, improve
health outcomes, and lower overall health care costs for plan
sponsors and participants," the company said in a statement.

At the time of the 2007 merger, CVS was the country's
largest pharmacy and Caremark was a leading PBM.

"We believe that this evidence suggests that CVS Caremark
has engaged in anti-competitive conduct that ultimately will
harm both consumers and competition," the group said in its

"We urge the commission to open an investigation of CVS
Caremark to explore whether there have been competition or
consumer protection violations of the law," the letter said.

The FTC did not respond to a request for comment.

(Reporting by Diane Bartz; Editing by Richard Chang,
Bernard Orr)

To submit a comment on this article, your email address is required. We respect your privacy and your email will not be visible to others nor will it be added to any email lists.