Antitrust Law Daily Wrap Up, ANTITRUST NEWS: AAI urges FTC to carefully scrutinize CVS co-pay policy, (Nov 12, 2014)

By Greg Hammond, J.D.

The American Antitrust Institute (AAI) is requesting that the FTC carefully scrutinize CVS Health Corp.’s newly announced policy, imposing an increased co-pay on consumers who use health insurance to fill prescriptions at pharmacies that sell cigarettes and other tobacco products. According to the advocacy group, the new policy could be an anticompetitive effort to exclude competing retail pharmacies, rather than an effort to end smoking and tobacco use.

CVS made waves earlier this year by announcing that it would stop selling tobacco products in its stores. However, its latest policy allegedly will impose up to $15 higher co-pays every time a customer with CVS Caremark-administered insurance has a prescription filled by a pharmacy that also sells tobacco.

“So let’s be clear. If your insurance company contracts with CVS Caremark to manage your drug benefits and you do not use CVS pharmacies, you will probably have to change pharmacies in order to avoid the penalty, if there is no ‘opt-out’ from the new, higher co-pay policy,” the AAI stated. “The upshot may be no effect on tobacco availability, but rather simply raising prices for consumers that shop at rival pharmacies.”

The AAI also suggests that CVS’ new policy could be more dangerous for competition and consumers than any of the company’s previous conduct, noting that the markets in which CVS competes are becoming more concentrated each year, due to a “general laxness of antitrust enforcement” in this area.

“Even if CVS’s new co-pay policy is motivated entirely by a desire to discourage smoking, CVS’s use of its market power to bludgeon consumers and rivals into ending tobacco sales at rival pharmacies is not a legitimate form of competition,” the group concluded.

The American Antitrust Institute is an education, research, and advocacy organization located in Washington, D.C. Its stated mission is to increase the role of competition, assure that competition serves the interests of consumers, and challenge abuses of concentrated economic power in the American and world economy.

Companies: American Antitrust Institute

News: Antitrust IndustryNewsTrends