Conn. AG launches probe of CVS prescription plan termination threat

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Jun 25 2010

Richard Blumenthal, the Connecticut attorney general and a candidate for the U.S. Senate, announced an investigation of CVS Caremark after the corporation threatened to terminate a discount prescription drug program, Dow Jones Newswires/The Wall Street Journal reports. In the program, customers pay $10 per year for access to discounted 90-day supplies of generic drugs. "State law requires pharmacies to charge Medicaid the lowest drug price they offer consumers, which the state says obligates CVS to provide the discount to those customers, too. CVS disagreed and responded by threatening to end the program in Connecticut, Blumenthal's office said." CVS says the change would make the program "economically unfeasible to continue" (Korn and Becker, 6/23).

New Haven (Conn.) Register: "'The CVS Health Savings Pass program was primarily developed for uninsured and underinsured individuals to make it possible for them to access certain medications through a membership program,' [a CVS] statement said. … The statement said company officials plan to comply fully with any legal obligations and cooperate with Blumenthal's investigation." CVS has until July 9 to comply with the subpoena for explanation on why providing the discounts to state Medicaid recipients would result in the termination of the program (Baruzzi, 6/24).

Reuters: "CVS Caremark is the nation's largest prescription drug provider and second-largest drugstore chain, with more than 7,000 stores. Blumenthal said CVS Caremark may have 'singled out' Connecticut, saying the program operates in other U.S. states. … Last November, CVS Caremark said the Federal Trade Commission was investigating its business practices. On May 4, it said a task force of 24 U.S. states, Washington D.C. and Los Angeles County was examining similar issues as the FTC" (Stempel, 6/23).

Bloomberg Businessweek: "Some members of Congress, concerned about CVS Caremark's pricing power as both a pharmacy benefits manager and a pharmacy chain, have introduced legislation that would bar the company from bidding on a contract for federal employees' prescription drugs. The federal government is currently one of CVS's biggest customers" (Freifeld and Wolf, 6/23).

This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.