Article Reprinted from "The Pink Sheet" May 19, 2009
Independent pharmacies are hoping the Federal Trade Commission's post-merger investigation of Merck's acquisition of Medco can serve as a model for their requested investigation into the merger between CVS and Caremark. Read more now...
Independent pharmacies are hoping the Federal Trade Commission's post-merger investigation of Merck's acquisition of Medco can serve as a model for their requested investigation into the merger between CVS and Caremark.
Representatives of the National Community Pharmacists Association, along with more than 80 independent pharmacists and several consumers, met with FTC Chairman Jon Leibowitz and his staff May 13 at FTC headquarters in Washington, D.C.
The group presented FTC with evidence of what it believes is anticompetitive behavior on the part of CVS Caremark. The merger of the largest national drug store chain CVS and the second-largest pharmacy benefit management firm Caremark in 2007 created a firm that fills or manages more than 1.2 billion prescriptions annually (1"The Pink Sheet," May 14, 2007, p. 22).
"We are asking the FTC to open an active investigation into these anticompetitive practices by CVS Caremark and their reconsideration of the merger between CVS and Caremark," Holly Whitcomb Henry, an independent pharmacist and this year's NCPA president said in a post-meeting press briefing.
In addition to an investigation, NCPA asked FTC to place several requirements on the company in a 2May 12 letter, including: "require Caremark to treat all pharmacies in a nondiscriminatory fashion"; "prohibit CVS from creating programs that disadvantage rivals by imposing higher costs on them"; "compel CVS to create an ironclad barrier between CVS and Caremark so that competitively sensitive Caremark information cannot be used by CVS"; and "prevent Caremark from sharing personally sensitive information with CVS."
NCPA has collected "hundreds of complaints" from pharmacies and consumers that it claims "document a clear pattern of anticompetitive conduct that increases costs to consumers and reduces their choices, as well as apparent violations of consumer privacy," the group says in a letter to FTC.
One particularly sore point is CVS Caremark's "Maintenance Choice" program, which NCPA says forces patients on chronic medications to switch from filling prescriptions at their usual pharmacies to either mail-order from Caremark or 90-day refills at CVS stores. NCPA also claims Caremark is giving confidential patient information to CVS so that their pharmacies can contact non-CVS customers and direct them to fill prescriptions at CVS stores.
CVS Caremark defended is practices, saying, "We disagree with NCPA's mischaracterization of our business practices. ... 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."
FTC is able to revisit its merger decisions and does so fairly often. One precedent in the PBM field is Medco's 1993 acquisition by the drug manufacturer Merck. Two years after approving the merger, FTC took a second look at the potential for the combination to create conflicts of interest, which culminated in a 1998 consent decree requiring the firm to set up a firewall between the two sides of the business (3"The Pink Sheet," Aug. 31, 1998, p. 12). Merck spun off Medco in 2003.
NCPA references that history in its discussions with FTC, claiming that CVS Caremark "presents the same concerns" as Merck-Medco.
The group has retained the legal services of an attorney who worked at FTC at the time of the Merck-Medco case, David Balto.
NCPA Making Grassroots Push
NCPA members are also lobbying members of Congress to write to FTC encouraging an investigation, an effort that appears to be meeting with some success.
"That message is getting a very receptive ear on Capitol Hill," NCPA Senior VP of Government Affairs John Coster said during the press briefing. "We've had many members of Congress from both parties tell us that they would contact or speak to [FTC] about their interest in opening up the investigation." He said Leibowitz told them he has heard from several legislators about taking a closer look at PBM activities or revisiting the CVS Caremark merger.
Henry added that Leibowitz "was very responsive to us. He said that he believed that the issues that we were presenting were of concern and indicated that his staff would begin to look into the many examples that we gave them of incidents where the conduct of CVS Caremark was increasing costs to patients, limiting their choice and access."
- Scott Steinke
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