F.T.C. settlement with CVS Caremark

Published 12:06 pm Thursday, January 19, 2012

CVS Caremark Corporation will pay $5 million to settle Federal Trade Commission charges that it misrepresented the prices of certain Medicare Part D prescription drugs,  including drugs used to treat breast cancer symptoms and epilepsy, at CVS and Walgreens pharmacies.

Excerpts from the FTC news release of 1/12/12 detail how CVS Caremark has practiced deceptive claims processes to fleece senior citizens that purchased drugs under the Medicare Part D prescription drug plan.  I would suggest that you take a close look at all drug prices CVS Caremark provided as fulfillment of any insurance benefit.  

Following the rapid service provided in filling a prescription sent in error by my physician to CVS/Caremark, Caremark engaged in a persistent collection efforts to force payment for drugs that I neither ordered nor could use, I decided to do just a little shopping and fact finding.  The good news is that I found out by doing just a little shopping and a little discussion with a local pharmacy, I could significantly reduce my drug costs.

The shopping allowed me to spend my own money, make my own decision to buy, I had  no deductible to meet and the savings on medicine were substantial.  Just so you don’t need to wonder what the term substantial means the drugs purchased cost me 10% of the price I was charged by CVS Caremark if my deductible was not met.  The charges for the drugs over the counter were 25% of the insurance copay.

It is worthwhile to take a brief look at the business model for a conventional local pharmacy and a mail order pharmacy like Caremark that is a fulfillment house for an insured group.  

A conventional pharmacy spends substantial amounts of money to promote it business to potential customers in the market area they serve.  A mail order fulfillment house like Caremark has its customers directed to it on a mandatory basis by the corporation that provides employee or retiree insurance coverage.  Financial advantage, mail order fulfillment house.

A local pharmacy must pay to have their drugs delivered to multiple locations.  The mail order fulfillment house has their drugs delivered to a central location and the insured customer pays the shipping costs for final delivery.  Financial advantage – mail order fulfillment house.

The mail order fulfillment house is paid to administer the program by the insuring company.  Financial advantage, mail order fulfillment house.

Given the mail order insurance pharmacies’ financial advantages over a local pharmacy there is no way that a local pharmacy should be able to compete much less provide drugs to a customer for a fraction of the normal copay.   The number of retirees and covered employees that are being fleeced would suggest that this a a multi million dollar scam promoted by companies that claim to be providing benefits to their loyal employees, retirees and those covered by medicare.

Ed Tyler lives in Pell City, he may be reached at ed@edtylerinc.com