Understanding Competition in U.S. Prescription Drug Markets: Entry and Supply Chain Dynamics #00465

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Understanding Competition in U.S. Prescription Drug Markets: Entry and Supply Chain Dynamics
In the fall of 2017 without announcement or notification, CVS/Caremark precipitously lowered reimbursements rates to retail pharmacies across the United States to a point where the reimbursement for a given prescription claim was far lower than the cost to purchase the pharmaceutical product. Pharmacies were seeing prescription claim billing that resulted in underpayment of up to $1000 per claim. All told, the under remittances cost small, locally owned pharmacies pharmacies tens of thousands of dollars each. All attempts at recourse through CVS/Caremark's complaint channels have been ignored or denied. In response to the under remittances many prescriptions were unable to be filled for patients because the loss would be too great for that patient's chosen pharmacy to bare. This puts patients that rely on a local pharmacy at great risk of not receiving needed medications and the continuity of care that they want and need from their trusted local pharmacist. CVS/Caremark also manages state Medicaid dollars through their Managed Care Organizations. Most of these Medicaid patients have no other way to get their medications except from a local pharmacy that offers delivery or is located within a reasonable distance from the patient. Unfortunately, this leaves the most fragile and at risk patients disproportionately affected. In some instances some patients are able to seek out a CVS pharmacy to fill their prescription which pulls back the curtain on some of CVS/Caremark's dirty dealings. One example is a prescription was billed at a local pharmacy. CVS/Caremark remitted payment to the pharmacy that was roughly a $200 below the pharmacy's cost. Because of the loss, the pharmacy customer was asked to take it to a competing pharmacy. The customer did so and transferred the prescription to their neighboring CVS. The customer then returned to the pharmacy after filling the prescription at CVS. and presented paperwork which illustrated that CVS Caremark paid their wholly own pharmacy a rate $600 greater than what they were giving the local pharmacy for the same prescription and quantity on the same day. To put this a different way, they under pay the independent pharmacy forcing prescription transfers to their stores, the customer fills it at CVS, (CVS renders the same exact service), CVS/Caremark pays themselves markedly more for the same claim. These increased payments are then passed on the employers and state Medicaid for inflated payments that CVS/Caremark pockets. If this is not the definition of unfair business practice or a large company acting as a monopoly then I do not know what one is. At this point this action is being repeated thousands of times daily across the country and is jeopardizing all small retail pharmacies contracted with CVS/Caremark. Ultimately this is reducing customer/patient choice due to unfair trade practices. To this point government agencies as a whole have completely dropped the ball with regard to the CVS/Caremark initial merger/acquisition and have turned a blind eye to their absolutely unfair business practices since its formation. CVS/Caremark has created an untenable situation for small pharmacy business and continues to inhibit healthy completion and diversity in the retail pharmacy market. This is leading to many locally owned pharmacies reducing jobs and possibly going out of business. With CVS/Caremark's recent announcement that they have plans to purchase Aetna Inc., it is even more imperative that the FTC or another agency acts and begins to scrutinize what is really going on in the retail pharmacy environment at the PBM level. Without your assistance the practice of pharmacy will be irreparably damaged further and the U.S. customer will be harmed by your inaction. This was intentionally written so as to not identify our business. CVS has repeatedly sought retribution including removing pharmacies from their network that speak out against their corrupt business practices