Caremark to pay $38 million to settle drug-switching complaint
Instead, Caremark kept rebates and discounts that it should have passed on to patients and employers, Pennsylvania Attorney General Tom Corbett said. The company also did not adequately explain to doctors how switching drugs would affect a patients' costs, Corbett said.
"Caremark was operating against their clients' interests by retaining rebates and discounts that they were obligated to pass onto their clients," Corbett said in a statement. "This agreement stops the deceptive business practices and takes the necessary steps to protect health plans and patients."
Corbett said the settlement requires Caremark to adopt measures to protect patients when it encourages them to switch drugs, and disclose more information about the effect of such a switch.
The parent company of Caremark, Woonsocket, R.I.-based CVS Caremark Corp., said it entered into the settlement to confirm its commitment to compliance with consumer-protection laws.
The $38.5 million is to be paid to 28 states and Washington, D.C. In addition, Caremark must pay as much as $2.5 million more to reimburse patients for the cost of switching cholesterol-controlling drugs.
The investigation began in 2004 and is similar to multistate investigations of other major pharmacy benefits management companies.
Sharing in the settlement are: Arizona, Arkansas, California, Connecticut, Delaware, Florida, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nevada, New Mexico, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Vermont, Virginia, Washington and Washington, D.C.
CVS Caremark's shares ended Thursday trading down 90 cents, or 2.2 percent, to $39.82.
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