CVS Caremark Corp. will pay $5 million to resolve allegations that one of its subsidiaries understated the price of several drugs, including medications that treat epilepsy and symptoms of breast cancer.
The payment will be used to reimburse Medicare prescription drug beneficiaries who paid more than they expected for the drugs, and it ends a two-year investigation by the Federal Trade Commission. CVS Caremark said its Rx America business accidentally published incorrect drug price information on a site maintained by Medicare. The FTC said the inaccurate information was also posted on third-party websites, and it was online from 2007 through at least November 2008.
The agency said that Medicare Part D beneficiaries choose their coverage based on listings at Medicare's Plan Finder site and similar websites. It said the RxAmerica price listings were deceptive and said many Medicare beneficiaries chose RxAmerica plans because of those prices. In some cases, the actual prices were 10 times higher than the listed prices. The drugs were sold at CVS and Walgreen Co. stores.
"The allegedly deceptive claims caused many seniors and disabled consumers to pay significantly more for their drugs than they expected," the FTC said, pushing some into the so-called "donut hole," or a gap in insurance coverage in which no drug costs are reimbursed.
RxAmerica was the pharmacy benefits business of the Longs Drugs Stores chain. CVS Caremark bought Longs and RxAmerica for $2.7 billion in a deal that closed in October 2008.
CVS, which is based in Woonsocket, R.I., said the FTC did not make any allegations of anti-competitive behavior or violations of antitrust law.
Shares of CVS Caremark rose 12 cents to $42.16 in afternoon trading.