CVS Caremark Corp. has agreed to cough up a cool $5 million to settle FTC claims it charged seniors and disabled consumers as much as 10 times the true value for a host of prescription drugs.The complaint, which also targets Walgreens, alleges the ubiquitous drugstore chain misrepresented the prices of drugs listed under a Medicare Part D package, some of which are used to treat breast cancer symptoms and epilepsy.
Not only did the customers pay an inflated price but the mistake caused them to hit their reimbursement limit for Medicare sooner than they expected, leaving them with inadequate coverage. (See how Californians are battling hospital price gouging.)
“This settlement puts money back in the pockets of older Americans who struggle to pay for their medications,” said FTC Chairman Jon Leibowitz. “With the cost of health care on the rise, the FTC is especially focused on protecting consumers from any deceptive claims that would cause them to pay more than they should.”
The $5 million will go toward refunding all affected customers, CVS said Thursday. In a statement posted to its website, the company pinned the snafu on RxAmerica, a subsidiary it acquired in 2008. Consumers use RxAmerica’s website to order prescriptions for their Medicare drug plans from a number of retailers, including CVS and Walgreens.
“During the course of this two year investigation, our company cooperated fully with the FTC and provided to the government millions of documents as well as access to numerous members of our management team who participated in voluntary interviews and depositions,” said Douglas A. Sgarro, in-house counsel for CVS.
This is probably the tip of the iceberg when it comes to price gouging regulation. In December, the Obama Administration issued a final rule ordering drug manufacturers that produce “certain critical drugs” to report any interruptions or delays in production to the FDA.
The government’s take is that any shortage of widely-used drugs could spur companies to artificially hike prices.