CVS Caremark Investigation, Pay-for-Delay Deals Top FTC Agenda

By Kevin Schweers

The ongoing investigations of CVS Caremark and the so-called “pay-for-delay” agreements between brand name and generic drug manufacturers appear to be high priorities for the U.S. Federal Trade Commission, based on Chairman Jon Leibowitz’s recent testimony on Capitol Hill.

Leibowitz testified before a May 20th Senate Appropriations subcommittee hearing to drum up support for the agency’s proposed budget for fiscal year 2011.  Given the agency’s many activities, it was encouraging to see the Chairman dedicate some of his limited time for testimony to two issues of interest to independent community pharmacists.

Of the CVS Caremark investigation Leibowitz said: “Pharmacy Benefit Management (PBM) services are a critical part of the health care industry, and the Commission has allocated substantial resources to enforcement, advocacy, and policy development in this area. PBMs can help health care plans manage the cost and quality of the prescription drug benefits they provide to their enrollees, but many have criticized PBMs for a lack of transparency in their operations, for improper use and inadequate protection of consumer information, and for utilizing their position in the market to undermine competition.

He continued: “Last year, the Commission took action against CVS/Caremark, a leading PBM, in order to protect the personal information of consumers. As CVS/Caremark has acknowledged, the Commission is currently investigating whether certain CVS/Caremark business practices may violate the FTC Act. This investigation is ongoing and has been structured as a joint effort of the Bureau of Consumer Protection and the Bureau of Competition so that the investigation can efficiently and effectively address both antitrust and consumer protection issues.”

NCPA has advocated for an FTC investigation into CVS Caremark since December 2008. More recently, this month NCPA officials and several community pharmacists met with FTC officials to renew their argument for the case against CVS Caremark.

As NCPA President and Arlington, Texas pharmacy owner Joe Harmison, PD, wrote on The

“On one occasion, NCPA detailed CVS Caremark tactics that secretly boost the costs to health plans and profitability of its mail order pharmacy. Also brought to the FTC’s attention is how aggressive auditing is used to recoup funds from community pharmacies on minor technicalities.

“On the second occasion, the focus was on how CVS Caremark’s actions have especially challenged community pharmacies and patients in rural markets, where health care options are more limited. Patients told they can only use CVS Caremark likely face a long trip to the closest CVS or a significant wait for their medicine through the mail. And their access to a local pharmacist who knows their health needs and history is lost.” [Read the entire article here.]

Leibowitz also said “the tide may be turning” on “pay-for-delay” agreements that he said postpone the entry of generic drugs into the market and cost consumers $3.5 billion each year. He said: “Such settlements limit competition at the expense of consumers, whose access to lower-priced, generic drugs is delayed – sometimes for many years – and raise the costs of prescription drugs for businesses and the government.”

NCPA commends the FTC’s work on that issue as well.

1 Response to “CVS Caremark Investigation, Pay-for-Delay Deals Top FTC Agenda”

  1. 1 CVS, Walgreens bid to dominate drug retail - SmartPlanet Trackback on June 18, 2010 at 4:09 pm

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