Proposed Consent Agreement In the Matter of CVS Caremark Corporation, FTC File No. 1123210 #00003 

Submission Number:
Ellen Stevenson
New York
Initiative Name:
Proposed Consent Agreement In the Matter of CVS Caremark Corporation, FTC File No. 1123210
FRAUD IN RXAMERICA MAILORDER BUSINESS IN 2009! I am writing to urge that you examine the CVS Caremark Medicare Part D (RxAmerica)generics mail order operation before agreeing to a settlement. In my opinion, by following the business practices through all of 2009 described below, they both deceived customers pushing them into the donut hole prematurely and probably overcharged Medicare. While CVS claims that the mispricing in the FTC case was accidental or just an error, I contend, and documents that I possess substantiate,that there was a patterm of deliberate fraud in their mail order business. CUSTOMER DECEPTION: CVS claimed costs for generics purchased from their mail order service far in excess of those initially stated on the website during the open enrollment period. Here is an example based on my husband Tom?s 2009 membership. When he enrolled at the Medicare website in December 2008 for the year 2009, RxAmerica quoted a ?full cost? for the generic [redacted] of $2.80 per month mail order. (This was reasonable as it can be purchased at most retail pharmacies without insurance for $5 or less/month.) Then, in the beginning of the year, he received a letter stating that generics purchased through their mail order plan would be $0. Just imagine how many members must have been induced to use mail order by the $0 co-pay. But in its September EOB (Explanation of Benefits), while RxAmerica reported a $0 cost for Tom, it claimed a ?full cost? of $106 for three months ($35.30 per month)? a price over 12 times the $2.80 they had first quoted at If the cost had actually gone up so dramatically, why would they not have raised instead of eliminating the co-pay? By making it $0 RxAmerica increased the number of clients who would use the mail order service where the company could then manipulate the cost figures. RxAmerica was using the larger supposed ?cost? to push its subscribers into the donut hole far sooner ? where they could then charge the member full price on all medications including the highly inflated price of $35/month for the [redacted]. They did NOT raise the cost at retail stores perhaps because knowledgeable pharmacists might spot the practice. (If he had filled his prescription four times, my husband would have been brought fraudulently almost $400 closer to the donut hole by this one cheap drug.) Of course if the new full cost had been charged directly to the subscriber ($106 instead of $0), most clients would have immediately howled. But they didn?t. Why? Probably, since their ?out of pocket cost? was $0, they didn?t bother to look further. I noticed this discrepancy by accident and believe that this is the essence of the scam. Indeed few seniors understand that the method for calculating ?total cost? includes not only their own ?out of pocket cost? (for this generic supposedly $0), but also the ?cost? that the insurance company claims. In this case the total cost for the year based on the $2.80 figure at the Medicare website would have been $33.60 -- not the inflated cost of $424 which was passed on to them surreptitiously. As consumers are encouraged to use generics to save money, countless seniors must have been caused financial harm by this scam. (However they did not have to pay the $2.80/month co-pay out of pocket - a small price for CVS to forfeit in light of the much higher gains to be reaped) MEDICARE OVERCHARGES: During this same period when CVS was claiming a ?full cost? for [redacted] of $35 per month, was that the cost that CVS was passing along to Medicare for reimbursement rather than the $2.80 it had originally claimed? And if not, were they keeping two sets of books? I don?t know the legal definition of fraud but ?intentional deception? probably comes close (or "bait and switch"). If so, and considering the large number of seniors who were injured by this practice, a $5 million settlement seems trivial!