When CVS Corp. combined with pharmacy benefits manager Caremark Rx Inc. for $26 billion, creating CVS Caremark Corp. (NYSE:CVS) in 2007, some heads turned at the drugstore's aggressive move into PBM, where it faces possible conflicts of interest.
Lately, objections to CVS' dual role as both a major seller of medicines and an administrator of pharma have gotten louder. This week some U.S. senators wrote a letter to the Federal Trade Commission on the matter.
The complaint follows one in May from the National Community Pharmacists Association. The group, with about 23,000 member pharmacies, said community pharmacists have received many complaints from patients and pharmacists about what they say are CVS Caremark's higher prices and
questionable marketing practices.
The association also called into question CVS/Caremark's pre-merger promise to be 'agnostic' as to where consumers fill their prescriptions, saying the Woonsocket, R.I., company taps into personal patient information and then aggressively uses that info to steer patients to CVS stores or Caremark mail order. "That's anti-competitive and, ultimately, anti-consumer," charged the association.
The senators apparently agree. On Tuesday, as a Bloomberg article
notes, Sens. Amy Klobuchar, D-Minn.; Russ Feingold, D-Wis.; and Byron Dorgan, D-N.D., wrote a letter to the Federal Trade Commission saying the merger "created a heightened opportunity for anticompetitive conduct in the prescription drug market" and has hurt "Main Street" pharmacies. The article also noted that on July 23, Mark Pryor, D-Ark.; and Roger Wicker, R-Miss., wrote a letter asking the FTC to "take appropriate action if CVS Caremark is engaging in any anticompetitive or deceptive practices."
Sen. Klobuchar recently got the FTC to investigate a different pharmaceutical matter. A Deal Pipeline
story (subscription required) from last week shows the FTC filed a case against pharma firm Lundbeck Inc. after complaints from physicians about high prices resulting from Lundbeck's purchase of two competing treatments for a rare infant heart condition flooded Klobuchar's office.
The CVS complaints come, of course, against the backdrop of tougher antitrust enforcement under the Obama administration. Earlier this week CVS was mentioned as being
in the running to acquire the 11.2 million member pharmacy benefit management business of health insurer Aetna Inc. (NYSE:AET). Considering the flak CVS is getting over the PBM business it already owns, that might not be such a great idea after all.
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Baz HiralalGo to the story on the SenatorsCVS may acquire Aetna's PBM business
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