CVS Caremark to pay $5 million to settle FTC investigation
By Sara Forden Bloomberg News
WASHINGTON - CVS Caremark Corp., the largest U.S. provider of prescription drugs, will pay $5 million to settle claims it misrepresented certain Medicare drug prices, ending a two-year antitrust and consumer protection probe by the U.S. Federal Trade Commission.
The FTC said it decided to close its investigation “after a thorough and comprehensive review of the other consumer protection and competition issues in this matter,” and won’t take any further action “at this time,” according to a letter addressed to CVS Caremark’s lawyer.
The FTC began investigating the business practices of the company in 2009 after CVS bought Caremark for $27.2 billion, the largest acquisition ever by a drugstore. The merger sparked complaints from consumer groups, independent pharmacists and lawmakers, prompting the FTC to take a second look at the combination of the pharmacy chain and pharmacy-benefits manager. A 24-state task force also conducted a review.
The settlement, which requires CVS to reimburse consumers who overpaid for certain prescription drugs, also bars CVS Caremark from making deceptive claims with regard to Medicare Part D drug prices, the FTC said today in an e-mailed statement.
“At the conclusion of this comprehensive investigation, the FTC made no allegations of antitrust law violations or anti- competitive behavior associated with any of our business practices, products or service offerings,” Douglas A. Sgarro, executive vice president and chief legal officer of CVS Caremark, said in a statement posted to PRN Newswire. CVS Caremark “cooperated fully” with the FTC’s investigation, he said.
From 2007 to at least November, 2008, CVS Caremark’s RxAmerica subsidiary posted prices for Medicare Part D prescription drugs available at CVS and Walgreens pharmacies that were lower than the actual prices in stores, the FTC said in the statement. The deceptive prices caused many consumers to chose RxAmerica plans and pay “significantly more than they expected for their drugs,” the FTC said.
In some cases the actual prices of the drugs were more than 10 times more than the posted prices, the FTC said.
“This settlement puts money back in the pockets of older Americans who struggle to pay for their medications,” FTC Chairman Jon Leibowitz said in the statement. “With the cost of health care on the rise, the FTC is especially focused on protecting consumers from any deceptive claims that would cause them to pay more than they should.”
CVS, based in Woonsocket rose 0.4 percent to $42.20 at 12:04 p.m. in New York trading.