Wednesday, April 08, 2009

Could the FTC undo CVS Caremark?

Here's an unusual possibility for you to consider.

The National Community Pharmacist's Association (NCPA) is trying to get the Federal Trade Commission (FTC) to challenge the 2007 merger that formed CVS Caremark.

Apparently, this is not as far-fetched as you might think, judging by comments from the incoming antitrust chief in a March 16 New York Times article:

"Christine A. Varney, President Obama's pick to run the antitrust unit at the Justice Department, said in her nomination hearings last week that she was "absolutely" open to retrospectively studying the effects of approved mergers… History suggests CVS Caremark, the company created by the 2007 merger of a drugstore chain with a pharmacy benefits manager, could be one of the first cases to be re-examined."

Wow. I had no idea that the government gets a do-over.

NCPA has been publicly pushing for an FTC review of CVS Caremark since at least December. Read NCPA's December 23, 2008, letter to Chairman William Kovacic.

The first reason cited in the NCPA's 2008 letter reads: "CVS Caremark has significantly reduced the copay for members when they fill their long-term prescriptions at CVS pharmacies." Gosh, that idea sounds familiar. Where else have I read something like this? Oh, yeah – right here.

Bruce Roberts' blog post from last Friday (NCPA Meeting With FTC on CVS Caremark) suggests that a meeting with the FTC is imminent, writing: "We're in the process of arranging a meeting during the conference with the new FTC Chairman, Jon Leibowitz, to discuss the anticompetitive and anti-patient practices of CVS Caremark."

I have no idea whether the FTC will (or can) take action, but I've learned not to underestimate the lobbying power of pharmacists.


I'll be off for the rest of the week to break (unleavened) bread with the extended family. If you are similarly inclined, then you'll chuckle at Moses is Departing Egypt: A Facebook Haggadah.

And if you've never heard of Facebook, please turn off your 8-track player and ask the nearest teenager.


  1. Is cost a consideration? How long will it take? Who will pay for this?

  2. Adam thanks for the update. Interesting! This is why I think Wal-Mart is more in line with what is going on in the market. Not a PBM, no anti-trust issues, just offering a loss leader to generate traffic for the pharmacy AND the store.

    Getting a "do over" does not seem "fair" to the shareholders and employees of CVS Caremark but then don't underestimate the ability of our government to respond to the lobbying of any group!

    I am also a little confused as to how a lower co-pay is not good for the consumer? If the government decides this is not a good match then no one gets a lower co-pay. Seems the only ones to benefit then are the NCPA and its members. To argue the third side of this love triangle, if the NCPA can get the Justice Department to reconsider the merger, more power to them!

    Al Godley

  3. Didn't the FTC undo the First Data Bank and Medispan merger awhile back?

  4. Thanks for that Facebook thread, now I can skip right through the Haggaddah tonite.

  5. I've said it here before right from the beginning.. this merger should have NEVER been approved to begin with. The company is TOO BIG and only makes it SEEM like they're saving people money. If they want to reduce copays they should do it EVERYWHERE not only in their own stores. GO NCPA!!

  6. Thanks Adam....and happy Passover to your family.

    But wait, remember years ago the RAD PCS buyout from the mid 90's? (PCS was the precursor to CRK). And yes, that's when the Grass family was riding high with Rite Aid. I believe the FTC put the kabosh on that one as well.

    I'll be having 8 glasses of wine tonight, not simply 4. It's often grueling.


  7. Why don't they go after WAG? All of the pharmacies they use in their PBM role are chains. For that matter, WalMart has done more to damage the independentpharmacy business than anyone else. Sigh...

  8. A zero copay is OK if everyone can offer it to the consumer, not just CVS. That is the issue !!!

  9. AnonymousJune 22, 2009

    The FTC did nothing in regards to the RAD PCS situation. RAD purchased PCS but then got themselves so far in debt with the shenanigans of the Martin Grass era that new management liquidated PCS to eliminate some debt. Had it not been for those issues RAD might still own PCS today, what could have been . . .

  10. I don't get it. Local pharmacies have been disappearing for years because they can't compete. CVS builds a better mouse trap and is able to offer lower prices. So it's not fair? Gosh, let's close down all the chains and everyone will be happy. Why don't the local pharmacists offer and market the one advantage they do have?...personal service.

  11. If the FTC really cared about the small pharmacies they would have never allowed the special pricing and all the special allowances given only to mail order pharmacies. CVS has been a target of the watchdawg groups for years. Finally someone listened to all their squawking but hopefully the FTC will stick to it's original decision. (yes I work for CVS and just took a huge hit in my 401-K but I guess I don't matter)