Caremark to pay $38M to settle drug-switching complaint

Thursday, February 14, 2008

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(02-14) 13:46 PST Harrisburg, Pa. (AP) --

Pharmacy benefits manager Caremark has agreed to pay $38.5 million in a multistate settlement of claims that it was deceptive when it encouraged patients to switch prescription drugs under the guise of saving money.

Instead, Caremark kept rebates and discounts that it should have passed on to patients and employers, Pennsylvania Attorney General Tom Corbett said Thursday. 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 $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 to switch cholesterol-controlling drugs.

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 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.

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