CVS Caremark Practices Draw Unprecedented Media Scrutiny

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’’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.

5 Responses to “CVS Caremark Practices Draw Unprecedented Media Scrutiny”

  1. 1 Christina June 14, 2010 at 11:11 pm

    Today was the first time I was effected by mail in prescriptions. I had no idea. I will tell you my story.

    My daughter’s prescription as running low. She has a seizure disorder. I was going to fill the prescription this weekend but late Friday night she had a seizure. Her doctor was not on call. So the on call doctor said let’s just wait and see. So because of this I said to myself well I will wait till Monday to talk to her doctor to see if they are going to change her meds. Instead of wasting my money and my insurance companies money on a script I might not use. She had enough medication till Monday night. So I talked to the doctor and they just upped her medication. I go to my pharmacist, which has been our family pharmacist for 30 years, and I was denied. I had two pills left which was her last dose. I was horrified. My daughter just had two seizures this weekend and now I am not suppose to not have any medication for her? They told me to pay for it and that I probably would not be reimbursed. I screamed and yelled and after calling the third person I finally got the prescription cleared but was warned that I have to mail in it next time. I do not want to. Medication can be changed every month. Why should we have to pay for a 90 day supply when I only possibly need a 30 day. When I want her refill filled I should have the choice and not be told what to do. I rather pay the 10 copay once a month for a prescription! I talked to my pharmacist and I can tell he was not happy. His place is a mom and pop place and he says people have called him crying in the same situation as I was in.

    Is there any petition I can pass around because this is not fair. I would love to be able to help out. I never want another Mom to go through that horrible helpless feeling I went through.

    • 2 Donnie Calhoun June 15, 2010 at 11:51 pm

      Hey Christina,
      I am a community pharmacist and I have experienced many problems such as yours at our family owned pharmacy. It doesn’t make good sense for the patient and the pharmacy for medication to be denied. At the end of the day it’s about the payment, not the treatment. The Federal Trade Commission is the place to contact with your concerns. We as pharmacists are sometimes caught in the middle as we all want the treatment to come first, that’s why we all went to school. One thing to always remember, a pharmacist should never let a patient run out of a critical drug and most community pharmacists won’t let that happen. When the postman delivers the prescriptions it is taken out of our hands. Thank you for posting on the NCPA Daily Dose. We need to hear from all patients and families with their concerns. We are continuing to ask congress to allow patients the freedom of choice to choose their provider. Hopefully one day they will listen. Thanks again.

      • 3 john July 25, 2010 at 11:21 pm

        Mr Calhoun,

        This was a plan selected by her company. They set the limations, pricing, and penalties for not following their wishes. I am sure you realize that Cvs/caremark is a company, just like the one you work for. It offers a wide array of plans including but not limited to the Maintenance choice plan that is being analyzed. Cvs/ caremark only administers plans that the company structures, they do not set the limitations thereof. Don’t Slay the messenger if the news is bad. Also, with the growing costs of medicines, do you honestly feel that if the Maintenance choice plan was not around you would receive more business? Feel free to say yes all you wish, but the correct answer is no. The reason being is that many plans may opt to do what they did prior to 2008, and that is require manditory mail order. Mandatory mail order on plans has been around a very long time indeed. There is no evidence stating that many plans would not opt for or return to this option.

  2. 4 Christopher Young June 18, 2010 at 5:00 pm

    I have evidence of CVS Caremark’s unfair business practices on a daily basis:

    – They are ultra secretive about the 90 day supply retail reimbursement rates. This contract is encrypted and you have to jump through all sorts of hoops to get the decryption application only to find out that you will actually be paid less than you paid from the wholesaler for most brand name drugs and many generics if you fill a 90 day supply if CVS Caremark is the PBM.

    – CVS Caremark will require a new prior authorization be obtained if you have a different independent pharmacy or chain pharmacy fill certain higher cost medication under the auspices it is to make sure that the patient truly needs that drug. The problem is that this happens even if there is already a PA on file obtained by the previous pharmacy. More damning than that is if I get a “prior authorization required” rejection, I can send the patient with the same exact script over to one their retail stores and no PA will be required. They aren’t using the PA process to help control costs, they use it as a hurdle to steer patients to their retail and mail-order pharmacies.

    – As a PBM CVS Caremark regularly requires patients in certain pharmacy plan groups to utilize their specialty or mail order pharmacies only with no exception for retail to fill the prescription. This is despite the retail pharmacy having a contract in place already with CVS Caremark. This is a direct violation of the “Any Willing Provider” laws that we have in Tennessee which state that is you have a contract where you accept the reimbursement rates CVS Caremark offers, the PBM must allow you to fill the medication. This is applicable unless the plan is self-funded which is the case most of the time. CCVS Caremark already has a judgment against them regarding this from 2003 but the FTC and attorney general’s office don’t seem to care that CVS continues such practices.

    This is by no means a comprehensive list of practices CVS Caremark utilize (as does Medco and Express Scripts) to manipulate and steer customers to their mail order and retail pharmacy. However, I believe it does justify an investigation by the FTC or at least the Boards of Pharmacy and Attorney General at the state level. This issue isn’t difficult to grasp for those who aren’t in the healthcare industry. It is simply a case where the pharmacy benefit manager (PBM) gets to make the rules by which retail pharmacies provide services to patients but in doing so, the PBM makes it more difficult for competitors of their own retail pharmacies to operate. This is obvious patient steering and effort to monopolize as much of the market as possible at the financial expense of plan sponsors, and worse, patient care and attention we provide our customers.

  3. 5 Gabriella October 18, 2010 at 12:27 am

    I am floored that there is no way to stop the mail-order prescription monopoly. I have never been forced to use Medco until now. I am an employee through Duke Health System and our only pharmacy option is Medco. I have always used a retail pharmacy and I was shocked when I received a 90-day supply of a new medication in the mail a few months ago. It wasn’t even a prescription that I was certain I could use (I ended up using 1 week of the pills and the others have been wasted). I attempted to refuse them, but Medco said no returns were allowed. I told them I had not given consent to have these pills sent to my home and that I had no knowledge that they were being sent to me (the truth! my retail pharmacy had contacted my MD for some-sort of approval for the medication and instead of replying to my own pharmacy the MD sent a brand new Rx order to Medco…duh). Medco supervisers were unwilling to help me and felt that discounting my order would be sufficient. I ended up paying for this prescription. My arm was twisted. I was forced to comply. And I think that is the wrong way to do business.
    Now I’ve learned that ANY maintenance medication I buy must be through Medco’s mail order or I will pay between 50% and full price at the retail pharmacy. Crazy! Is this legal? This will drive retail pharmacies out of business. Whose idea was it to implement these absurd rules for pharmaceutical insurance?! I’d rather pay my retail pharmacy cash at this point and completely forgo the insurance.

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