UPDATE 3-Conn. subpoenas CVS Caremark over drug program

* Subpoena issued by Connecticut attorney general

* Company resisted extending program to Medicaid patients

* CVS Caremark to cooperate, hopes to continue program

* Shares of CVS Caremark up slightly (Adds CVS statement, description of Medicaid)

By Jonathan Stempel

NEW YORK, June 23 (Reuters) - Connecticut's attorney general subpoenaed CVS Caremark Corp (CVS.N) on Wednesday after the company threatened to shut down a consumer discount drug program rather than extend it to Medicaid patients.

Attorney General Richard Blumenthal said the subpoena is part of a probe into CVS Caremark's threat to end its Health Savings Pass program in the state.

A state law that takes effect July 1 would require the Woonsocket, Rhode Island-based company to also offer its lowest drug prices to Medicaid patients.

CVS Caremark is the nation's largest prescription drug provider and second-largest drugstore chain, with more than 7,000 stores.

Blumenthal said CVS Caremark may have "singled out" Connecticut, saying the program operates in other U.S. states.

Gov. Jodi Rell had asked the attorney general to review whether ending the program would be legal.

"CVS Caremark's intention to abruptly cancel a popular program that has assisted families in defraying the costs of medications is indeed alarming and raises significant legal questions," Blumenthal said in a letter to CVS Caremark Chief Executive Thomas Ryan. "I urge you in the strongest terms to reconsider this course of action."

The program lets a consumer pay a $10 annual fee to fill a 90-day prescription for any of 400 generic drugs for $9.99.

Mike DeAngelis, a CVS Caremark spokesman, in a statement said the new Connecticut law would make it "economically unfeasible" to continue the discount program in the state.

He said the company will cooperate with Blumenthal's investigation, is "hopeful" it can continue offering the program, and will refund membership fees if it cannot.

Medicaid is a health program covering about 50 million lower-income Americans.

OTHER INVESTIGATIONS

The subpoena seeks documents to support CVS Caremark's claim that extending the program would be too costly. It also seeks to identify drugs covered by the program, the number of consumers enrolled, and other data.

CVS Caremark has until July 9 to comply.

Last November, CVS Caremark said the Federal Trade Commission was investigating its business practices. On May 4, it said a task force of 24 U.S. states, Washington D.C. and Los Angeles County was examining similar issues as the FTC.

Then on Friday, CVS Caremark ended an 11-day dispute with Walgreen Co (WAG.N), the largest U.S. drugstore chain, over prescription drug reimbursements.

Blumenthal, a Democrat, is running for a U.S. Senate seat.

Shares of CVS Caremark were up 10 cents at $31.50 in afternoon trading on the New York Stock Exchange. (Reporting by Jonathan Stempel; editing by John Wallace, Gerald E. McCormick and Matthew Lewis)