A national group of independent pharmacists Wednesday called on
the Federal Trade Commission to conduct an extensive investigation
of alleged anticompetitive conduct by CVS Caremark Corp. (CVS) and
to consider reopening the 2007 merger that formed the hybrid drug
retailer and pharmacy benefits manager.
Representatives of the National Community Pharmacists
Association, with pharmacy customers in tow, met with FTC Chairman
Jon Leibowitz to raise antitrust and consumer-protection concerns
about CVS Caremark, including the group's assertion the company is
improperly steering its prescription benefits patients to CVS drug
stores.
The pharmacists, in Washington for an annual meeting, also met
with lawmakers to express their concerns about CVS Caremark and the
pharmacy benefits management, or PBM, industry, and asked members
of Congress to request that the FTC review the CVS Caremark merger.
The group, which had opposed the merger, has been pressing the FTC
in recent months to investigate the company and its conduct.
"We are cautiously optimistic about the results of our meeting,"
with Leibowitz, said NCPA President Holly Whitcomb Henry in a
conference call with reporters.
"Based on today's meeting, we're hopeful and encouraged, but
we'll see what happens," said the group's general counsel, Joanne
Thelmo.
CVS Caremark's conduct harms community pharmacies, and "more
importantly their anticompetitive behavior is harming our patients
and our customers and that's what we're really concerned about,"
said Henry, who operates three pharmacies with her husband in the
Seattle area. The company's actions increase costs, limits patient
choice and access, and reduce quality and convenience for patients,
she said.
The group presented in writing numerous examples of conduct it
considers problematic, and five pharmacists and a North Carolina
couple spoke with the FTC about specific situations, according to
Henry.
In a letter to Leibowitz written in advance of the meeting, the
NCPA said CVS Caremark dominates the pharmaceutical services
industry and its retail business is using its pharmacy benefits
management operation to "eliminate consumer choice and drive
consumers from rival pharmacies."
One of the group's key concerns -- though not its only one --
revolves around CVS Caremark's "maintenance choice" program, which
allows the company's pharmacy benefits management members to buy
medications for chronic conditions at CVS stores for the same price
they would pay at the company's mail-order pharmacy.
CVS Caremark considers the program an added convenience for
patients whose employers' drug-benefit plans require them to use
mail-order supplies for maintenance medications. The community
pharmacists and other critics, however, say the program unfairly
steers patients from other drug stores, and the NCPA alleges the
company improperly uses private patient information to do so.
"We disagree with NCPA's mischaracterization of our business
practices," said CVS Caremark spokeswoman Carolyn Castel. "The
merger of CVS and Caremark is, in fact, making pharmacy health care
more accessible, more effective and more affordable. 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."
The NCPA, in its letter, asked the FTC to investigate CVS
Caremark "to attack both anticompetitive and deceptive conduct,"
and to "consider whether CVS' consummated acquisition of Caremark
has reduced competition in the pharmacy and PBM markets, and seek
appropriate relief, including imposition of enforceable firewalls
and non-discrimination obligations, or divestiture, if necessary."
The group is working with lawyer David Balto, a former policy
director of the FTC's competition bureau.
The group also asked that the FTC require Caremark, the PBM part
of the company, to treat all pharmacies in a nondiscriminatory
fashion, bar CVS from creating programs that "disadvantage rivals
by imposing higher costs on them," and prevent Caremark from
sharing sensitive patient information with CVS.
The FTC had no comment.
CVS Caremark is coming under criticism from consumers and
others. Last week, a group of state legislators - the National
Legislative Association on Prescription Drug Prices - asked the FTC
to investigate the company as well, saying the merger "created a
heightened opportunity for anticompetitive and exclusionary conduct
that harms consumers by increasing the price of drugs and limiting
patients' access to pharmaceutical care."
The calls for closer scrutiny of CVS Caremark come as another
major PBM, Express Scripts Inc. (ESRX), seeks to acquire the
pharmacy benefits management business of health insurer WellPoint
Inc. (WLP). The NCPA opposes that merger and has asked the FTC to
investigate it, asserting it would harm consumers by further
concentrating the PBM industry.
JPMorgan analyst Lisa Gill, in a note, said she wouldn't be
surprised if the FTC looked into the CVS Caremark merger, given the
Obama administration's view on vertical transactions. She said she
remained confident, however, that the company provides choice to
its PBM members and isn't abusing its power in the marketplace.
Employers, not the PBM, make the decisions on prescription-benefit
plan designs, noted Gill. She added that the patients are receiving
better prices at CVS stores than at the independent pharmacies.
-By Dinah Wisenberg Brin, Dow Jones Newswires; 215-656-8285;
dinah.brin@dowjones.com
