CVS Caremark to pay $38.5M in multi-state settlement

WOONSOCKET – CVS Caremark Corp. (NYSE: CVS) has agreed to pay $38.5 million, in a multi-state consumer protection probe, to resolve allegations that two legacy pharmacy benefits management businesses deceived doctors and unnecessarily drove up prescription drug-care costs.

The company’s Caremark LLC and former AdvancePCS (now CaremarkPCS LLC) subsidiaries “have expressly denied any and all allegations, and there has been no finding of wrongdoing or inappropriate business conduct on their part,” CVS Caremark said in a statement.
In the settlement with 28 states and the District of Columbia, the company’s Nashville-based Caremark Rx unit agreed to pay $12 million on behalf of Advance PCS, $10 million on behalf of Caremark, $16.5 million in state investigative costs and up to $2.5 million in reimbursement for certain medical tests.
An associated consent order requires that the two subsidiaries maintain certain PBM business practices, such as requiring the company to inform customers when a cheaper generic version of their prescription drug is available, according to Illinois Attorney General Lisa Madigan said in a statement available online at www.IllinoisAttorneyGeneral.gov/. But that “will not result in significant changes to current business practices,” CVS Caremark said, adding: “The company is committed to driving value for its clients and plan participants by effectively managing pharmaceutical costs and improving health care outcomes.”
The investigation “is similar to multi-state consumer protection investigations of other major PBM companies,” CVS Caremark said. The company said the probe began in 2004, with the former Advance PCS, which Caremark Rx had acquired before merging with CVS Corp last year.
“The company has agreed to enter into the settlement to confirm its continued commitment to compliance with state consumer protection laws … and to avoid the uncertainty and expense of the investigation,” CVS Caremark said in announcing the agreement. “The amounts to be paid were previously accrued for by legacy Caremark in prior fiscal periods, so the settlement will not affect the 2008 financial results of the company.”
CVS Caremark Corp. (NYSE: CVS) operates the CVS/pharmacy stores; the CVS.com online pharmacy; Caremark Pharmacy Services; and the MinuteClinic retail-based health care subsidiary. Additional information is available at investor.cvs.com.

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