August 1, 2009

CVS May Undergo Antitrust Investigation

CVS is under scrutiny due to allegations claiming that the company inappropriately used its pharmacy benefits business to win clients and squeeze out smaller competitors.

Groups have been complaining to the Federal Trade Commission (FTC) about whether the CVS drugstore chain's 2007 purchase of Caremark is fair or not, as the company drives higher prices for consumers in some cases.

The senators wrote to FTC Chairman Jon Leibowitz about circumstances where patients who did not use a CVS pharmacy were required to make a higher co-pay.  The five senators also asked Leibowitz to investigate whether the company engaged in anti-competitive conduct.

"We have been informed that CVS pharmacists receive notification in their electronic prescription processing system if a consumer has filled prescriptions in a non-CVS pharmacy," wrote Senators Mark Pryor, a Democrat, and Roger Wicker, a Republican.

"In these situations, the CVS pharmacist is instructed to ... possibly attempt to transfer all prescriptions to the CVS pharmacy," they wrote.

U.S. Democratic senators Byron Dorgan, Russell Feingold and Amy Klobuchar wrote that their constituents had complained about being told they were only allowed to fill a limited number of prescriptions outside the CVS system.

"Pharmacies in rural America are already struggling to keep their doors open, and we are concerned that the end result of this merger will be more Main Street pharmacies going out of business," the three warned, in asking the FTC to "reexamine" the merger.

CVS has denied the assertions.

"Our integrated pharmacy and PBM operations provide greater choice and more convenience for customers and patients, improve health outcomes, and lower overall health care costs for plan sponsors and participants. Any suggestions that our business practices are anti-competitive or that we are violating antitrust laws are totally false," it said in a statement.

Independent pharmacists have already been asked for a firewall to be erected between CVS's retail pharmacy business and its pharmacy benefits business.  CVS has over 6,900 chain stores.

The FTC has not yet commented on the matter.


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