CVS Caremark agreed to pay $5 million to settle charges brought by the Federal Trade Commission. The FTC accused the company of misrepresenting the price of certain prescription drugs in one of its Medicare drug plans. This misrepresentation caused many older consumers to pay prices that were significantly higher than advertised. CVS Caremark runs prescription drug plans for employers and insurers and works with a network of about 65,000 pharmacies, which includes more than 7,300 CVS branded drugstores.
The FTC released a statement saying, “After a thorough and comprehensive review of other consumer protection and competition issues in this matter, the F.T.C. issued a letter closing the investigation.” The decision comes after more than two years of investigation.
The agency looked into CVS Caremark in 2009 after some legislators, labor unions, pharmacies and consumer groups raised concerns about potentially anticompetitive and anticonsumer business practices by the company. The F.T.C. opened an investigation early that year into whether the merger of CVS, one of the largest drugstore chains, with Caremark, one of the largest pharmacy benefits managers, had given the company an unfair market advantage in directing customers to certain drugs and obtaining information about competing pharmacies. The more serious allegations of anticompetitive behavior were dismissed by the agency.
Only one violation was found. One of the company’s Medicare drug plans was found to have misled some consumers about drug prices. CVS said in a statement that the settlement was related only to the business practices of RxAmerica, a subsidiary of Longs Drug Stores, that occurred before the company was acquired by CVS Caremark in October 2008.
According to CVS, the subsidiary posted inaccurate prices for certain generic drugs on a Web site maintained by the Centers for Medicare and Medicaid Services. CVS said that the company rectified the pricing problem upon learning of it. The F.T.C. asserted that while much of the incorrect pricing did occur before the purchase, some continued after the acquisition by CVS.
Larry Merlo, the chief executive of CVS Caremark, said, “CVS Caremark is pleased to have reached an agreement with the F.T.C. that ends the investigation and enables us to continue our focus on offering unique, innovative products and services that differentiate us and benefit consumers.”