Pharmacies ask U.S. to reassess CVS, Caremark merger

WASHINGTON Wed May 13, 2009 5:42pm EDT

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WASHINGTON (Reuters) - An association representing independent pharmacies said it asked the U.S. Federal Trade Commission on Wednesday to reassess CVS's (CVS.N) purchase of Caremark, saying CVS pushed up prices and used sensitive business information to poach customers from independents.

Representatives of the National Community Pharmacist Association, which has 23,000 member pharmacies, met with FTC Chairman Jon Leibowitz to discuss problems they said arose from the 2007 merger of drugstore company CVS with pharmacy benefit manager Caremark.

The group claimed that CVS pharmacy benefit managers steered patients to their own drugstores by raising co-pays for drugs bought elsewhere or by requiring that they be purchased at CVS.

Association president Holly Whitcomb Henry said on a media conference call that Leibowitz told them the issues were "of concern" and that FTC staff would look into them.

Henry said on the call that the pharmacies wanted a firewall between CVS's retail pharmacy business and its pharmacy benefits business.

CVS, with more than 6,900 U.S. stores, could not be reached to comment on specific claims by the group, but had said prior to release of a statement by the group that the association had mischaracterized its business practices.

The FTC declined to comment.

Last week, the National Legislative Association on Prescription Drug Prices asked the FTC to take another look at its approval of CVS's purchase of Caremark, saying there was evidence of "harmful and deceptive conduct."

J.P. Morgan said in a research note on Wednesday that it disagreed with the independent pharmacists' argument that CVS was restricting choice on the grounds that CVS does not dictate plan design.

Shares of CVS closed down 3.1 percent at $31.95 on the New York Stock Exchange trade.

(Reporting by Diane Bartz)

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