The Federal Trade Commission announced that CVS Caremark Corp. agreed to pay $5 million to settle a complaint that it misinformed seniors about the price of certain Medicare Part D prescription drugs sold through CVS and Walgreens pharmacies.
The action by the company, according to the FTC, caused seniors and consumers with disabilities to pay significantly more for drugs. It also pushed them more quickly into the so-called “doughnut hole,” in which drug costs aren’t covered by the federal program.
The FTC says Caremark offers drug plans through its subsidiary RxAmerica, acquired in 2008. Consumers shopping for a drug plan looked up the prices of drugs on RxAmerica’s website, where the prices were low-balled, the FTC says. Sometimes, the agency says, the actual price of the drugs was more than 10 times the price quoted online.
The money will be used to reimburse consumers.
CVS Caremark released a statement:
“During the course of this two year investigation, our company cooperated fully with the FTC and provided to the government millions of documents as well as access to numerous members of our management team who participated in voluntary interviews and depositions,” said Douglas A. Sgarro, Executive Vice President and Chief Legal Officer of CVS Caremark. “It is important to note that, at the conclusion of this comprehensive investigation, the FTC made no allegations of antitrust law violations or anti-competitive behavior associated with any of our business practices, products or service offerings.”
Pursuant to the consent order, CVS Caremark will deposit $5 million into a fund that will be used to compensate consumers who purchased coverage for the 2008 plan year from a Medicare Part D Prescription Drug Plan sponsored by Rx America, a subsidiary of Longs. The fund is being established as a result of Rx America inadvertently posting on a website maintained by the Centers for Medicare and Medicaid Services (CMS) inaccurate pricing information for certain generic drugs. In addition, CVS Caremark agreed on a go forward basis to refrain from making any misrepresentations regarding drug pricing information relating to affiliate sponsored Medicare Part D plans.