FTC investigates CVS after couple protests prescription prices

FTC investigates CVS after couple protests prescription prices

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by STUART WATSON / NewsChannel 36
E-mail Stuart: SWatson@WCNC.com

Bio | Email | Follow: @stuartwcnc

WCNC.com

Posted on November 19, 2009 at 12:00 AM

Updated Thursday, Nov 19 at 10:59 AM

CHARLOTTE, N.C. -- You might think the bigger the pharmacy the cheaper the drugs. After all, big pharmacy chains can buy in bulk and pass the savings on to you.

Jan and Max Hauser pay close attention to their drug costs. But earlier this year, the retired truck driver and his wife found something most Medicare patients miss.

"That's when I discovered the difference in the price of drugs," says Max.

He's right. Medicare pays some pharmacies a lot more than others for the exact same drugs.

"When we seen that big a difference it was unreal," says Jan.

And Max says most Medicare patients don't know anything about it: "They are under the impression, like I was, everybody got paid the same."

It's spelled out in black and white in the Hausers' "explanation of benefits." For Simvastatin -- a cholesterol drug -- at Pike's Pharmacy, an independent, Medicare through the Hausers' benefit plan paid nothing.

But at CVS for the same drug, for a three-month supply, Medicare paid $165.99.

"I was very upset because I couldn't understand why the difference was so astronomical," says Jan. 

The Hausers saw similar disparities with other drugs -- ulcer drugs, blood pressure medicine. CVS charged three times, seven times more than an independent pharmacy.

And this is not just some story about the Hausers paying too much. It's about the taxpayers -- all of us -- paying too much. Because three-fourths of Medicare drug costs are paid by you and me -- the taxpayers. And those costs run in the tens of billions of dollars.

"I mean, it kind of makes you sick at your stomach," says Jan.

The CVS charges also cost Medicare patients like the Hausers more money out of their own pockets.

Here's why. Once Medicare pays $2,700 a year for drugs, the patient is on the hook for 100 percent of their drug expenses until those costs reach $4,300 a year.

So the more a pharmacy charges, the quicker patients reach that "hole" and start having to pay the full cost of their drugs.

"I said I can't afford this. CVS is going to break me about the middle of the year," says Max.  

Independent Charlotte pharmacist Jesse Pike isn't surprised at what the Hausers discovered. He'd seen similar price disparities with other patients.

"And this is happening around the country to how many seniors? Nobody knows and there's no way to easily detect it," says Pike. 

Now, you might think it would be easy to remedy the problem. Medicare patients should just read their benefits statements and shop around.

It's not that easy.

Because CVS -- the nation's biggest drug store -- has merged with the nation's biggest prescription benefit manager, Caremark.

CVS/Caremark manages the Hausers' prescriptions and millions like them.

And CVS/Caremark is steering patients refilling long-term or "maintenance" medications strictly to CVS.

"They're trying to freeze out the little independent drugstore," says Jan.

CVS's director of public relations, Christine Cramer, e-mailed in response to questions about the Hausers that "Any Medicare ... participant is free to choose which network pharmacy to use, and there are no restrictions that limit a participant's choice of pharmacy."

But CVS/Caremark is sending out letters to patients who use independent pharmacists to refill maintenance medications warning "…if you continue to use this pharmacy for additional refills of these long-term prescriptions, the cost of the medicine will not be covered..."

"Absolutely outrageous behavior," says Larry McNeely, a health specialist at the U.S. Public Interest Research Group (USPIRG). "It sounds like big brother trying to intimidate." 

McNeely and other consumer advocates have called on the Federal Trade Commission to investigate CVS/Caremark.

"One part of the company has control over where these individuals go for their prescription drugs," says McNeely. "And they're using that control to pay the other part of the company: CVS."

Jesse Pike, the community pharmacist, says, "This is what is so unbelievable and it's un-American for this to happen."

So Jesse Pike asked the Hausers to go with him to Washington to talk to the Federal Trade Commission.

"When people begin to holler, somebody's going to listen," says Jan Hauser. 

Their testimony attracted Congressman Larry Kissell, who called CVS/Caremark's practice of writing customers to steer them toward CVS alone "deceptive" and "dishonest."

"When they use that power of being the largest chain and the largest distributor to raise the prices, that's a problem," says Kissell. 

Kissell and more than a dozen other members of Congress have asked the FTC to review the CVS/Caremark merger.

"Somebody has to pay attention," says Jan Hauser. "Somebody has to be policing this portion and they're not doing that."

But earlier this month a CVS/Caremark company official disclosed that the company *is* under FTC investigation.

A CVS/Caremark spokeswoman sent us a statement saying the company is "cooperating fully" with the FTC investigation and is "confident" it's in compliance with antitrust laws.

Since the announcement, some business analysts have called on CVS/Caremark to voluntarily break up the massive merger -- unprecedented in size.

That is *not* the case when it comes to some Medicare patients and the pharmacy chain CVS.

And it's not just the patients who are paying more. It's you, the taxpayer.

Medicare recipient Jan Hauser of Charlotte says, "If it's happening to us, it's happening to others."

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