FTC OKs Final CVS Caremark Order;Refers Pharmacists' Concerns
24 June 2009 - 4:12AM
Dow Jones News
The U.S. Federal Trade Commission has unanimously approved a
final consent order relating to CVS Caremark Corp.'s (CVS)
settlement of charges that the company illegally dumped sensitive
customer information in trash containers outside some of its drug
stores, the agency said Tuesday.
The FTC also has referred to its Bureau of Competition a
national independent pharmacists group's separate concerns that CVS
Caremark's pharmacy-benefits management, or PBM, operation has
improperly shared patient information with the company's retail
side to steer customers to CVS stores, to the detriment of
competitors and customers.
CVS Caremark agreed earlier this year to pay $2.25 million to
settle U.S. Department of Health and Human Services allegations
related to the dumping of customers' private information, while
denying that it had engaged in wrongful conduct. The FTC has said
the company failed to take appropriate security measures to protect
customers' and employees' sensitive financial and medical
information.
Under the FTC order, which received final approval last week,
the company must implement and maintain a comprehensive
information-security program and obtain audits from an independent
professional to ensure the program meets required standards.
Several parties, including the National Community Pharmacists
Association, contacted the FTC during the agency's public-comment
period on the consent order.
The independent pharmacists group's concerns go beyond the
dumping of private customer information; the group wants the FTC to
reopen the 2007 merger of CVS and Caremark, claiming that the
company has engaged in anticompetitive behavior, such as using
private patient information to steer Caremark benefit-plan members
to CVS stores. Representatives of the group met with the FTC's
chairman last month, saying afterward they were encouraged by the
meeting.
CVS Caremark, which operates 6,900 drug stores and is one of the
nation's largest pharmacy-benefits managers, has denied wrongdoing
and called the independent pharmacists' suggestions of data misuse
unsubstantiated and unfounded.
In a letter last week to the NCPA, the trade commission
explained that the public interest would best be served by
accepting the CVS Caremark consent order, which covers many of the
issues the group raised.
Regarding the NCPA's concerns that information sharing between
the Caremark PBM and the CVS pharmacies has harmed consumers and
competing pharmacies, the FTC said: "Because this part of your
comment mainly concerns the impact of these practices on competing
pharmacies, the comment has been referred to the Bureau of
Competition for assessment."
The violations of law alleged in the FTC's complaint against the
company aren't based on information-sharing or anticompetitive
practices, the agency said. The consent order does, however,
prohibit misrepresentations about the privacy and security of
sensitive information, and therefore would bar misrepresentations
about CVS Caremark's information-sharing practices, the FTC
added.
The FTC retains the ability to bring a new action against the
company if circumstances warrant it, the agency told the
pharmacists group.
The FTC isn't at liberty to say whether it does plan to reopen
the completed CVS Caremark merger, as the NCPA has requested, as
such information is nonpublic, an agency spokesman said.
The NCPA had no immediate comment Tuesday.
-By Dinah Wisenberg Brin, Dow Jones Newswires
215-656-8285; dinah.brin@dowjones.com