Harms to competition, and to consumer choice, cost, and privacy cited.

Community Catalyst joined Consumer Union, US Pirg, the National Consumer Federation, and NLARx to ask the FTC to order CVS-Caremark to undo the four year old merger between the CVS pharmacy chain and Caremark, one of the nations largest pharmacy benefits managers.

The letter, covered in today’s New York Times, describes how CVS has used their role as a pharmacy benefit manager (which simply tells a pharmacy whether your health plan covers your prescription or not) to gain customers over other pharmacies.  The letter notes how recent investigations by the FTC and 24 Attorneys General highlight a number of unfair practices designed to switch consumers to CVS pharmacies.

For instance, CVS-Caremark has allegedly charged consumers higher co-payments at  non-CVS pharmacies.  Also, by listing the  organization’s full name “CVS Caremark” on the benefits card provided to beneficiaries of the health plans Caremark serves, some consumers have been deceived into thinking that they can only fill their  prescriptions at  CVS pharmacies. Perhaps the most shocking conduct is the alleged practice of the pbm Caremark providing confidential consumer information to their CVS pharmacy operations, which allows the pharmacists “to solicit non-CVS customers by phone and mail in order to direct them to fill their prescriptions at CVS stores.”

The FTC has been investigating the anti-competitive practices of CVS-Caremark since 2009, and may decide soon how to address these alleged violations of anti-trust and consumer protection laws. The letter urged FTC to order the merger to be undone, and force CVS to sell its pbm business.  If the FTC decides against ordering the break-up of the CVS – Caremark entity, the letter asks FTC to require strong “nondiscrimination” protections for “consumers and pharmacies from programs … which force consumers to use either Caremark-owned mail order or CVS-owned retail pharmacies and ultimately lead to higher prices for consumers.”  The letter also asks FTC to appoint an “independent trustee” to monitor a “stringent firewall between CVS and Caremark” to “protect the confidential information of patients….”

For more info on some lawsuits by pharmacies and consumers concerning these unfair or anti-competitive practices, see Pharmalot’s blog here.

And to learn more about CVS-Caremarks practices that drive up their health plan customer’s costs, visit Change-to-Win’s Alarmed About CVS Caremark website.

David Armstrong reports in today’s Wall Street Journal that Change to Win, a member of the Prescription Access Litigation coalition, is launching campaign to challenge CVS Caremark’s [NYSE:CVS] sending of a letter to doctors of specific patients, apparently promoting Merck’s [NYSE:MRK] diabetes drug Januvia. (“Unions Say CVS Pushed Costly Drug to Doctors“)

As the article reports:

A group of labor unions is launching a campaign that accuses CVS Caremark Corp. of violating patient privacy and improperly pushing doctors to prescribe a costly prescription drug.

Change to Win, a group of unions that represents about six million workers, said CVS’s pharmacy benefits management business has been urging doctors via a letter to add Merck & Co. diabetes drug Januvia to specific patients’ treatments. The letter, obtained by the union group, said CVS identified the diabetes patients through a review of prescription-drug claims processed by its Caremark unit.
[on the rise]

A line at the bottom of the letter says Merck paid for the mailing. Neither Merck nor CVS would say how much Merck paid, and the drug maker also declined to say whether the mailing boosted Januvia sales…

Januvia is as much as eight times more expensive than many other diabetes treatments, according to a recent study. Some medical experts say patients may not need the drug and may respond just as well to older, cheaper treatments…

Change to Win says the Januvia letter is an example of CVS putting its interests ahead of the businesses that pay it to manage employee prescription-drug benefits. CVS became a big player in the pharmacy-benefits business when it acquired Caremark, then the nation’s second-largest PBM, for about $27 billion in 2007.

CVS, the nation’s largest retail pharmacy chain, with approximately 6,800 stores across 41 states, acquired Caremark, one the nation’s three largest Pharmacy Benefit Managers (PBMs) in March 2007. Despite concerns that a company comprised of both a pharmacy chain and a PBM (which are supposed to help control health plans’ pharmacy costs) would have untenable conflicts of interest, the Federal Trade Commission (FTC) approved the merger). Change to Win’s campaign suggests that these concerns were not trivial.

We’ll report more on Change to Win’s campaign as we info becomes available…