GSPO Local Member, Alan Brown, Urges Substantive Remedial Action Regarding CVS Caremark

Alan R. Brown, RPh and Congressman Rodney P. Frelinghuysen (R) meet to discuss action regarding CVS Caremark

With the support of the Garden State Pharmacy Owners Organization (GSPO) and like-minded Congressional colleagues, including Congressman, Rodney Frelinghuysen (R), Alan Brown, RPh, owner of Liberty Drug in Chatham, has been requesting that the Federal Trade Commission review the CVS Caremark merger to ensure that, in this case, fair competition was not being stifled, as far back as 2 years ago. Since the merger, scores of complaints have been heard from consumers, senior citizens, pharmacies and others, that CVS has used its control of Caremark to harm competition.

Although the Commission has been conducting a wide-ranging competition and consumer protection investigation for the past 18 months, most recently, Mr. Brown and members of the GSPO have been stressing the need for full and complete relief of this case, including requiring that CVS divest Caremark.

Mr. Brown brings to attention, strong evidence that the CVS Caremark merger has harmed consumers. Some particularly anti-competitive practices of CVS/Caremark that attempt to drive consumers to CVS stores and, in the process, harm consumers and reduce competition include:

• The CVS/Caremark “Maintenance Choice” program that forces consumers to fill prescriptions at CVS store/mail-order or else, pay an increased co-pay to fill 90-day or maintenance prescriptions at non-CVS locations.
• The confusing “CVS Caremark” benefits card which makes customers (especially vulnerable, elderly patients) believe that they can only use their benefits card and fill prescriptions at CVS stores.
• Switching Medicare beneficiaries to CVS stores with an increased co-pay, thus, bringing these customers to the Part D “donut hole” prematurely.
• Using confidential patient information collected by Caremark to enable CVS pharmacists to solicit non-CVS customers by phone and mail in order to direct them to fill their prescriptions at CVS stores.
• Engaging in egregious auditing practices that threaten the viability of many pharmacies or are simply a way to increase profits and reduce patient choice.

By reducing choice, raising prices and violating patient privacy, the combination of CVS/Caremark poses profound problems for consumers. The need for comprehensive relief is clear – CVS is the largest pharmacy chain in the U.S. and Caremark is the largest PBM. Together they deal with over 40% of all consumers, and its activities have incredible potential for significant competitive and consumer harm.

The GSPO believes the remedy in this case is straightforward. None of these problems existed prior to the combination of CVS and Caremark. The simplest, most comprehensive remedy is to require CVS to divest Caremark. Only through divestiture can consumers be assured that CVS will be unable to use its control of Caremark to engage in deceptive and anti-competitive conduct. The fact that CVS and Caremark have engaged in deceptive practices in the past demonstrates the difficulty of crafting any remedy short of divestiture that will work.

If the staff seeks alternative relief, the Commission is being strongly urged, in the very least, to put in place a stringent firewall between CVS and Caremark to be monitored by an independent trustee. At the time of its merge, CVS committed to establishing a firewall between CVS and Caremark operations in order to prevent the improper and unlawful transfer of confidential information. This was consistent with past FTC PBM enforcement actions such as Lilly/PCS and Merck/Medci that required a firewall as a condition of permitting the merger. Since CVS made this pledge, it has become clear that this pledge has been utterly disregarded. The staff has received dozens of complaints documenting the sharing of Caremark data with CVS operations. The flagrant violation of this commitment made at the time of the merge demonstrates that, for a respondent whose goal is to use Caremark to drive pharmacy sales, civil penalties are unlikely to protect the privacy of consumers in the future.