[Federal Register Volume 77, Number 12 (Thursday, January 19, 2012)]
[Pages 2724-2726]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-876]



[File No. 112 3210]

CVS Caremark Corporation; Analysis of Proposed Consent Order To 
Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.


SUMMARY: The consent agreement in this matter settles alleged 
violations of Federal law prohibiting unfair or deceptive acts or 
practices or unfair methods of competition. The attached Analysis to 
Aid Public Comment describes both the allegations in the draft 
complaint and the terms of the consent order--embodied in the consent 
agreement--that would settle these allegations.

DATES: Comments must be received on or before February 13, 2012.

ADDRESSES: Interested parties may file a comment online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``CVS Caremark, File No. 
112 3210'' on your comment, and file your comment online at https://ftcpublic.commentworks.com/ftc/cvscaremarkcorpconsent, by following the 
instructions on the Web-based form. If you prefer to file your comment 
on paper, mail or deliver your comment to the following address: 
Federal Trade Commission, Office of the Secretary, Room H-113 (Annex 
D), 600 Pennsylvania Avenue NW., Washington, DC 20580.

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FOR FURTHER INFORMATION CONTACT: Lisa Weintraub Schifferle (202) 326-
3377) or Meredyth Smith Andrus (202) 326-2863), Federal Trade 
Commission, 600 Pennsylvania Avenue NW., Washington, DC 20580.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Sec.  2.34 the 
Commission Rules of Practice, 16 CFR 2.34, notice is hereby given that 
the above-captioned consent agreement containing a consent order to 
cease and desist, having been filed with and accepted, subject to final 
approval, by the Commission, has been placed on the public record for a 
period of thirty (30) days. The following Analysis to Aid Public 
Comment describes the terms of the consent agreement, and the 
allegations in the complaint. An electronic copy of the full text of 
the consent agreement package can be obtained from the FTC Home Page 
(for January 12, 2012), on the World Wide Web, at http://www.ftc.gov/os/actions.shtm. A paper copy can be obtained from the FTC Public 
Reference Room, Room 130-H, 600 Pennsylvania Avenue NW., Washington, DC 
20580, either in person or by calling (202) 326-2222.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before February 6, 
2012. Write ``CVS Caremark, File No. 112 3210'' on your comment. Your 
comment--including your name and your state--will be placed on the 
public record of this proceeding, including, to the extent practicable, 
on the public Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the Commission tries to 
remove individuals' home contact information from comments before 
placing them on the Commission Web site.
    Because your comment will be made public, you are solely 
responsible for making sure that your comment does not include any 
sensitive personal information, like anyone's Social Security number, 
date of birth, driver's license number or other state identification 
number or foreign country equivalent, passport number, financial 
account number, or credit or debit card number. You are also solely 
responsible for making sure that your comment does not include any 
sensitive health information, like medical records or other 
individually identifiable health information. In addition, do not 
include any ``[t]rade secret or any commercial or financial information 
which is obtained from any person and which is privileged or 
confidential,'' as provided in Section 6(f) of the FTC Act, 15 U.S.C. 
46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). In particular, do 
not include competitively sensitive information such as costs, sales 
statistics, inventories, formulas, patterns, devices, manufacturing 
processes, or customer names.
    If you want the Commission to give your comment confidential 
treatment, you must file it in paper form, with a request for 
confidential treatment, and you have to follow the procedure explained 
in FTC Rule 4.9(c), 16 CFR 4.9(c).\1\ Your comment will be kept 
confidential only if the FTC General Counsel, in his or her sole 
discretion, grants your request in accordance with the law and the 
public interest.

    \1\ In particular, the written request for confidential 
treatment that accompanies the comment must include the factual and 
legal basis for the request, and must identify the specific portions 
of the comment to be withheld from the public record. See FTC Rule 
4.9(c), 16 CFR 4.9(c).

    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comments online. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/cvscaremarkcorpconsent by following the instructions on the Web-
based form. If this Notice appears at http://www.regulations.gov/#!home, you also may file a comment through that Web site.
    If you file your comment on paper, write ``CVS Caremark, File No. 
112 3210'' on your comment and on the envelope, and mail or deliver it 
to the following address: Federal Trade Commission, Office of the 
Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue NW., 
Washington, DC 20580. If possible, submit your paper comment to the 
Commission by courier or overnight service.
    Visit the Commission Web site at http://www.ftc.gov to read this 
Notice and the news release describing it. The FTC Act and other laws 
that the Commission administers permit the collection of public 
comments to consider and use in this proceeding as appropriate. The 
Commission will consider all timely and responsive public comments that 
it receives on or before February 13, 2012. You can find more 
information, including routine uses permitted by the Privacy Act, in 
the Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

Analysis of Agreement Containing Consent Order To Aid Public Comment

    The Federal Trade Commission has accepted, subject to final 
approval, a consent agreement from CVS Caremark Corporation (``CVSC'').
    The proposed consent order has been placed on the public record for 
thirty (30) days for receipt of comments by interested persons. 
Comments received during this period will become part of the public 
record. After thirty (30) days, the Commission will again review the 
agreement and the comments received, and will decide whether it should 
withdraw from the agreement and take appropriate action or make final 
the agreement's proposed order.
    CVSC is a pharmacy services company that, among other things, 
markets and sells Medicare drug plans and Medicare Part D drugs. CVSC 
currently owns multiple subsidiaries, including RxAmerica, that offer 
Medicare Part D prescription drug plans. Medicare Part D is a 
prescription drug benefit for consumers with Medicare coverage, 
primarily seniors and persons with disabilities. To obtain Part D 
benefits, beneficiaries must enroll in a Medicare drug plan 
administered by an insurer or other private company approved by the 
Centers for Medicare & Medicaid Services (``CMS''). Beneficiaries can 
shop for a Medicare drug plan by looking up plan benefits and drug 
costs on a provider's Web site, by going onto CMS' Medicare Web site 
and using the web-based tool known as Plan Finder, or by visiting other 
third-party Web sites where such information is posted. Once enrolled, 
beneficiaries generally have cost sharing obligations until the total 
cost of their drugs reaches what is known as the coverage gap or 
``donut hole,'' at which point the beneficiary pays the full cost of 
the drugs.
    The Commission's complaint alleges that CVSC, through its 
subsidiary RxAmerica, violated Section 5 of the FTC Act by 
misrepresenting that the prices of covered Medicare Part D prescription 
drugs, as posted on Plan Finder and on the Web sites of RxAmerica and 
other third parties from approximately 2007 until the end of 2008, were 
accurate estimates of the prices that beneficiaries would pay for those 
drugs at CVS and Walgreens. Rather, the prices charged to RxAmerica 
beneficiaries who purchased their covered Part D generic drugs from CVS 
Pharmacy or Walgreens during the relevant time period were 
significantly higher--in some cases as much as ten times higher--than 
the prices posted on those Web sites. As a result of this

[[Page 2726]]

pricing discrepancy, many RxAmerica beneficiaries using CVS Pharmacy 
and Walgreens stores ran through their benefits coverage at faster 
rates than they would have based on the posted prices. Many 
beneficiaries, therefore, unexpectedly entered the donut hole and 
became responsible for the total cost of their prescription drugs, with 
no opportunity to change plans until the next calendar year.
    To remedy the violations charged and to prevent CVSC from engaging 
in the future in practices similar to those alleged in the complaint, 
the proposed order contains injunctive provisions and a consumer 
redress program.
    Section I of the proposed order prohibits CVSC from misrepresenting 
the price or cost of Medicare Part D prescription drugs, or other 
prices or costs associated with Medicare Part D prescription drug 
    Section II of the proposed order requires CVSC, within five (5) 
days of the date the order becomes final, to pay the Commission $5 
million for consumer redress and administrative costs. This provision 
specifies that the Commission may apply any remaining funds after 
redress is completed for such other equitable relief as it determines 
to be reasonably related to CVSC's practices alleged in the complaint. 
Any remaining funds not used for such equitable relief shall be 
deposited into the United States Treasury as disgorgement. Section III 
of the proposed consent order requires CVSC to produce certain 
information necessary for the Commission to administer consumer 
    Sections IV through VIII of the proposed order are reporting and 
compliance provisions. Section IV requires CVSC to retain documents 
relating to its compliance with the order for a five (5) year period. 
Section V requires dissemination of the order now and in the future to 
all current and future subsidiaries, current and future principals, 
officers, directors, and managers, and to persons with responsibilities 
relating to the subject matter of the order. It also requires CVSC to 
secure a signed and dated statement acknowledging receipt of the order 
from all persons who receive a copy of the order pursuant to Section V. 
Section VI ensures notification to the Commission of changes in 
corporate status. Section VII mandates that CVSC submit a compliance 
report to the Commission within sixty (60) days, and periodically 
thereafter as requested. Section VIII is a provision ``sunsetting'' the 
order after twenty (20) years, with certain exceptions.
    The purpose of this analysis is to facilitate public comment on the 
proposed order. It is not intended to constitute an official 
interpretation of the complaint or the proposed order, or to modify the 
proposed order's terms in any way.

    By direction of the Commission.
Donald S. Clark,
[FR Doc. 2012-876 Filed 1-18-12; 8:45 am]