Understanding Competition in U.S. Prescription Drug Markets: Entry and Supply Chain Dynamics
I am writing this to you finding out from the Walstreet Journal, the CEO of Aetna will be paid $500 million after the sale to CVS Caremark for an astonishing $69 billion. More than the GDP for some countries who have better health care than the United States. How is this possible? It is possible because not only is CVS Caremark an oligopoly, it is known to be a MONOPOLY. With over 70 million members CVS grows their wealth from payments by drug companies to keep their drugs on their formulary. At the same time it has contracts with insurers to fill prescriptions and contracts with pharmacies to fill medications for CVS/Caremark members. The contracts that small pharmacies sign are secret and the pharmacy is unable to voice their complaint about this contract to the board of pharmacy for fear of losing their contract. If there was an alternative we would not sign a contract that we could take to court because of the confidenciality agreement and agreement to settle out of court. When settling out of court none of the unfavorable language of the agreement between a $600 billion dollar company and one worth $100,000 are not heard by any jury or news agency. IT IS NOT PUBLIC. There are many barriers to entry such as the specialty medication which drugs CVS Caremark puts on their list because they do not want to have to carry these medications at their locations but at one single location and making these drugs sound SPECIAL so that an insurance company uses CVS caremark as their SPECIALTY pharmacy. Other pharmacies can join in the game but now they must be Credentialed. Credentialing is done by organizations that charge 15 to 30 thousand dollars to show that the pharmacy is filling prescriptions to the standard a pharmacy should already know. CVS keeps mailing out these specialty medicines each month for about $10,000 billed to the insurance company and they also make money on the rebate from the drug company to keep them on the formulary. Others can not compete with this monopoly. I assure you patients will get better specialty care from their local pharmacy than from a specialty pharmacy. Mail order does not provide better service for customers than traditional pharmacies and often send things the patients down need and are over billing. The FTC has been paid off for years. Knowing that a pharmacy benefits company is paying a competitor less to fill a prescription that they pay themselves is obvious... but a signed contract makes it legal... ethical no. The independent pharmacy has no other choice but to take the loss and sell their business to someone else. The FTC is not concerned about ethics. Like most Americans we know they are concerned with lining their pockets. It is a corrupt agency. When CVS starved Target pharmacies with their small payments Target had no other recourse than to sell their pharmacies to CVS who knew to the dime how much their business was worth. They sold their pharmacies for less than the chief pharmacist's salary. Next they moved in and started making money because their own contract pays much more than the one they make everyone else sign. THIS IS A MONOPOLY. If you at the FTC know what the MAC price means, how it attained and why CVS pays us less than the cost of the medications we buy then you are smart. if you can explain to us why you allow it without breaking up CVS and Caremark... billing for a customer down the street and paying them less... is not ethical. But as you have shown... you are not ethical people. hopefully, Mr Trump will save us from these greedy monsters so that we may continue to provide care to our customers... some who value excellent customer service.