Business Blog
Dollars to donuts
When consumers comparison shop, cost is crucial. That’s why it’s so important for companies to make sure what they say about their prices is accurate. If businesses need a timely reminder, the FTC’s proposed $5 million settlement with CVS Caremark drives that point home.
CVS Caremark offers Medicare Part D prescription drug plans through subsidiaries like RxAmerica, which CVS Caremark acquired in October 2008. When choosing their Medicare Part D drug plan, a lot of people do their research online. They may look up plan benefits and drug prices on RxAmerica’s webpage, use the Plan Finder tool on the Centers for Medicare & Medicaid Services site, or visit third-party sites that post price info.
The FTC charged that from 2007 through at least November 2008, RxAmerica posted on its website — and supplied for posting to Plan Finder and third-party sites — incorrect prices for some Medicare Part D prescription drugs at two pharmacy chains, CVS and Walgreens. In some instances, the actual prices were as much as 10 times more than the posted prices.
The FTC says that as a result of the deceptive price claims, many elderly and disabled consumers who chose RxAmerica plans paid significantly more than they expected for their drugs at CVS and Walgreens. What’s more, according to the complaint, that pushed some of them into the “donut hole” — the coverage gap where none of their drug costs are reimbursed — sooner than they anticipated or planned.
The proposed order bars CVS Caremark from misrepresenting what people will pay for Medicare Part D prescription drugs or other prices or costs associated with Medicare Part D prescription drugs plans. In addition, CVS Caremark will pay $5 million in consumer refunds. The FTC will mail checks to eligible consumers.
The FTC also considered some other consumer protection and competition issues raised in this matter, but issued a letter closing its investigation.
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