Wednesday, August 27, 2008

Antitrust suit against vertically integrated CVS

In 2006, when CVS, the second-largest retail pharmacy, acquired Caremark, a Pharmaceutical Benefits Manufacturer (PBM), there was speculation that Walgreen Co, the largest retail pharmacy, would be "jolted into action," to look for its own acquisition to avoid losing customers:
“If Walgreen eventually believes it’s losing volume to CVS from a loss of Caremark customers, they may need to step up their search,” said HSBC analyst Mark Husson.
Instead, Walgreen Co has sued CVS for blocking access to Caremark customers, like BlueCross:

Walgreen Co. says state law specifically forbids insurers from denying licensed pharmacies the right to participate in an insurance network. The company said a Shelby County Chancery Court judge ruled in January of this year in its favor when it sued BlueCross to get the rights to the network. Now, it's going after Caremark, saying the company continues to prevent Walgreen Co. from selling mail order and specialty drugs to BlueCross members.

...Walgreen Co.'s lawsuit says Caremark, since 2005, "intentionally engaged in this scheme to protect its unlawful, lucrative and favored position in (BlueCross') networks ..."

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