Understanding Competition in U.S. Prescription Drug Markets: Entry and Supply Chain Dynamics #00444

Submission Number:
Stuart Rabinowitz
New York
Initiative Name:
Understanding Competition in U.S. Prescription Drug Markets: Entry and Supply Chain Dynamics
My name is Stuart Rabinowitz and I am the owner of a independent pharmacy, one of many independents that are being harmed by the unfair and anticompetitive trade practices of CVS Caremark that I believe may violate Section 5 of the FTC Act and other regulations. CvsCaremark is one of the largest Pbms in the world. They also own their own mail order pharmacy, the largest drug store chain, specialty pharmacy, long term care and physician offices. As of the last week in October pharmacies are experiencing a drastic reduction in reimbursement for filled prescriptions administered by CvsCaremark, so severe that we are unable to maintain inventory. We are being reimbursed well below our cost with reimbursement as low as pennies on the dollar from what we pay. These practices not only impact the viability of independent pharmacies like myself, but perhaps even more important, consumer access to generic drugs is in jeopardy. Many pharmacies do not take the CVS plans including Walgreens and Riteaid. In my pharmacy's zip code we are the only pharmacy to accept all the Caremark plans. If we stop hundreds of Medicaid recipients would have to travel miles to the nearest CVS. If patients can not receive their medications and CVS has a limited formulary and inventory Health outcomes will worsen if immediate action is not taken. The middleman PBM CvsCaremark took this action of lowering prices unilaterally without alerting the health plans, Medicaid or Pharmacy. Cvs Caremark controls every aspect of the marketplace including what drugs are covered, which pharmacies can fill the rx, the reimbursement which can differ for every pharmacy, the patients copay and how much money the sponsor will pay for the rx.. CvsCaremark at their discretion can put all their competition out of business simply by lowering the price paid to the pharmacy. As the system stands now CvsCaremark determines the prices which are paid to its competitor pharmacies. A example would be if a FTC lawyer filled a prescription for drug A at my pharmacy. My pharmacy buys the drug for $10. Caremark decides to pay me $10 plus a $5 copay for a total of $15. Caremark then bills the insurance company $100 making $85 profit . Most often there is a spread between what the pharmacy is paid and the cost to the consumer, insurance company or government so CvsCaremark allows itself to make more money on the prescription than the pharmacies that actually fill the rx. CvsCaremark sells brand name drugs and forces us to sell below our cost to be competitive with their own Caremark mail order. However CvsCaremark demands from pharmaceutical manufacturers rebates on Brand name drugs. Since legislators agree that the rebate is a secret Caremark can keep or distribute the money how it sees fit. There is no fire wall between the pbm Caremark and retail pharmacies. Retail pharmacy customers routinely get bombarded with telephone calls and mailings for them to switch to their own stores or mail order. Caremark is doing hundreds of billions a year with over 30 billion in profits and has lead to a attitude of them being bigger than the government, ignoring federal and state laws of regulation including antitrust and a brazen attitude towards unfairly crushing their competition. We need the FTC to investigate this monopoly and its unfair trading practices and hopefully force a break up of the PBM Caremark its CVS stores, mail-order, specialty, and long term care businesses. Sincerely, Stuart Rabinowitz