Bad Behavior

The New York Times reports, “After more than two years of investigation, CVS Caremark agreed on Thursday to pay $5 million to settle charges by the Federal Trade Commission that the company had misrepresented the price of certain prescription drugs in one of its Medicare drug plans, causing many older consumers to pay significantly higher prices than advertised. This settlement comes at a time of intensive government scrutiny of pharmacy benefit managers like CVS Caremark, which run prescription drug plans for employers and insurers. Currently, the F.T.C. is reviewing the proposed merger of the two main competitors to CVS Caremark: Medco Health and Express Scripts.”

What do you make of this announcement? Is it evidence that PBM’s in general—and CVS Caremark in particular—are more interested in making money than helping consumers save money on their prescription purchases? Also, is this more evidence that the proposed merger of Medco and Express Script is not good for anyone but the companies?

There is nothing wrong with making money from providing health care services, but taking advantage of people to do it is wrong. When market concentration occurs so that there are fewer players is this type of behavior more likely? I think it might be.