The CVS Caremark-Walgreens standoff has brought more attention to questions about CVS Caremark’s business practices than any time since CVS revealed in November that it was the subject of a Federal Trade Commission or since NCPA met with the FTC one year ago to ask for an investigation.
Walgreens validates concerns by independents, others about CVS Caremark:
“’Their plans basically force consumers to use either CVS pharmacies or the Caremark mail-order pharmacy. They don’t want consumers to go anywhere else,’ said Pat Epple, executive director of the Pennsylvania Pharmacist Association. ‘This is not in the interest of the patient,’ said Epple, whose Harrisburg association represents about 1,600 pharmacists in the state.” – Pittsburgh Tribune-Review
“The Walgreen complaints echo some of the concerns that smaller drugstores have raised about CVS Caremark,” said B. Kemp Dolliver, a research analyst who follows the industry for Avondale Partners. Mr. Dolliver personally owns stock in two drug benefit competitors to CVS Caremark. The Federal Trade Commission is currently looking into some of the issues raised by the smaller pharmacies, he said, and the Walgreen dispute could draw even more attention to these potential concerns.
Independent pharmacists argue CVS Caremark has limited consumers’ choices of where to refill their prescriptions.
‘When a patient does not have the right to choose the health care provider, in this case the pharmacy that they choose and trust, that’s not good,’ said Joseph H. Harmison, the president of the National Community Pharmacists Association, a group representing nearly 23,000 independent community pharmacies and pharmacy chains.
Some people who feel intimidated by physicians turn to their local pharmacists for medical advice about their prescriptions, he said. ‘The pharmacist is often the person a patient will wait to ask the questions to,’ he said. – The New York Times
“Caremark encourages plan members to fill prescriptions at CVS pharmacies. One of its long-term aims is to keep those customers. So in a nutshell, Walgreens has been participating in plans that reward shoppers for going to its biggest rival.” – The Associated Press
Patient impact highlighted; independent pharmacies recommended by Consumer Reports
“Walgreens spokesman Michael Polzin called CVS’ actions ‘disappointing’ and highlighted new patient access problems. ’Walgreens has more than 50% of the nation’s 24-hour and drive-thru pharmacies. Right now, you may be 2 miles from a Walgreens, but because of this action, you may have to drive 20 miles to another pharmacy to get prescriptions filled.’” — CNNMoney
“Consider independents. Consumers report high satisfaction with independent local pharmacies but have a perception that they’re too expensive, according to a Consumer Reports survey. Many local pharmacies will ‘almost always’ match prices with bigger pharmacies when a customer asks, [Consumer Reports' Health.org’s Editor for Prescriptions Drugs Lisa] Gill said. ‘If feel like that’s a huge unspoken, unknown tip,’ she said.” – Chicago Tribune
Wall Street weighs in
“’[W]e think CVS Caremark has more to lose in this dust-up. According to Morningstar, only about 15% of CVS Caremark’s pharmacy network customers fill prescriptions at CVS drugstores, leaving the company reliant on other retail chains, including Walgreen’s.” – Barron’s
Morgan Stanley, among others, downgraded CVS Caremark stock.
More lost business on the horizon for CVS Caremark?
“’If Walgreens and CVS Caremark fail to reach a resolution within a month,’ according to Helene Wolk, a senior analyst for Sanford C. Bernstein LLC, ‘about $1.3 billion in PBM business could be poached by either Express Scripts or Medco.’ She said CVS Caremark can afford to play hardball with Walgreens for only a month or so before it reaches a settlement to protect its future PBM business.” – The Wall Street Journal
“Citigroup analysts said the breakup was good news for the other big pharmacy benefit managers ExpressScripts and Medco Health. The Federal Trade Commission has been investigating CVS Caremark’s competitive trade practices since the drugstore chain acquired the huge mail order pharmacy benefit manager in 2007.” – St. Petersburg Times
CVS Caremark program restricts patient choice
“Independent pharmacies say they are getting squeezed by a CVS Caremark Corp. drug refill program that restricts where participants can buy prescriptions.
“’Our biggest issue is that the patient is mandated to go to CVS or Caremark,’ [ Doug Hoey, chief operating officer of the National Community Pharmacists Association], whose group represents more than 23,000 independent pharmacies, said in a telephone interview. ‘They lose the ability to choose where they get their medicine.’
“His trade group joins Walgreen Co., the largest U.S. drugstore chain, in escalating complaints about the way CVS Caremark operates its pharmacy benefits management division.” – Bloomberg News.