CVS-Aetna (continued)

December 5, 2018

Experience as a patient

Experience as an editor

• September, 2018 editorial: "Reducing Drug Costs – PBMs are Not Needed and Should Not be Used!"
• August, 2018 editorial: "The Corporate Destruction of Health Care: Part 2"
• March, 2018 editorial: "Merger Mania – Bigger Isn't Better!"
• January, 2018 editorial: "The FTC Must Prevent CVS from Acquiring Aetna, and Require CVS to Divest Caremark!"
  

Hearing

January 24, 2019

1. Walmart announced that it would no longer participate in the CVS-Caremark prescription program because of the financial and other terms of the program in which it dispenses prescriptions to individuals covered by the CVS plans. Walmart's statement includes the following comments: "This issue underscores the problems that can arise when a PBM can exert their unregulated power to direct members on where to fill their scripts, disrupting patients' health care. . . Walmart is standing up to CVS's behaviors that are putting pressure on pharmacies and disrupting patient care."
   
   Although Walmart and CVS quickly agreed on a new deal, the details of which have not been revealed, this experience, and the Walmart statement noted above, provide additional examples of how CVS-Caremark can use its size and influence to the disadvantage of patients and its competitors, even before its acquisition of Aetna is permitted to be implemented. One has to think that the fact that this confrontation between two giant companies was so quickly resolved is because CVS did not want a public debate of its anticompetitive practices to be prolonged at the time when you are evaluating the ramifications of it having an even more powerful influence on the provision of health care with a priority of increasing its own profits.
   
   If a company as large as Walmart has such concerns about the financial and other terms of CVS-Caremark prescription programs, independent pharmacies that do not have the leverage that Walmart has to force CVS to provide a better deal have little chance of surviving.


2. The January 5-6, 2019 issue of The Wall Street Journal has a front-page story (Joseph Walker and Christopher Weaver) titled: Medicare Overpaid Insurers Billions: CVS, Humana and others managing Part D drug plans pocketed $9 billion in extra revenues." Excerpts from this article are noted below:
   
   "Each June, health insurers send the government detailed cost forecasts for providing prescription-drug benefits to more than 40 million people on Medicare. . .
   
   However, year after year, most of those estimates have turned out to be wrong in the particular way that, thanks to Medicare's arcane payment rules, results in more revenue for the health insurers, a Wall Street Journal investigation has found. As a consequence, the insurers kept $9.1 billion more in taxpayer funds than they would have had their estimates been accurate from 2006 to 2015, according to Medicare data obtained by the Journal.
   
   Those payments have largely been hidden from view since Medicare's prescription-drug program was launched more than a decade ago, and are an example of how the secrecy of the $3.5 trillion U.S. health-care system promotes and obscures higher spending."
   
   Even if what has occurred is somehow legal, it is wrong and a blatant abuse of taxpayer funds. Through deception and lack of transparency, CVS and others have outsmarted the government and taxpayers by exploiting prescription programs and the healthcare system to increase their profits, and this situation will only be exacerbated if CVS is permitted to acquire Aetna. I commend you for your insight and concerns in further investigating this plan.


3. The Columbus Dispatch has published a series of investigative reports regarding the anticompetitive practices of CVS in its Medicaid prescription programs in Ohio. The January 20, 2019 issue includes an article (Marty Schladen and Cathy Candisky) titled: "CVS paid itself far more than some major competitors, report says." This article includes the following statements:
   
   "Critics say the state report is strong evidence that CVS was, in essence, using taxpayer money to give its own retail stores an unfair advantage in the marketplace.
   
   At the same time this issue is being scrutinized in Ohio, CVS is attempting to convince a federal judge that its $70 billion proposed merger with insurance giant Aetna doesn't pose a threat to competition in the pharmacy marketplace."
   
   In spite of the fact that the information that is available in heavily redacted disclosures is very limited and incomplete, there is sufficient evidence to demonstrate CVS's anticompetitive practices. In addition, in many CVS-Caremark prescription programs there are restrictions and/or incentives that result in patients having to obtain their prescriptions in CVS stores instead of the pharmacies they have used for many years.


4. Although it does not involve CVS or Aetna, another recent report is pertinent to the matter you are addressing. Optum, the PBM of UnitedHealth has sued a former executive who has joined the Amazon/J.P. Morgan/Berkshire Hathaway partnership to address healthcare issues, because it alleges that the former employee would violate a non-compete agreement and reveal trade secrets. I recognize the importance of trade secrets and that certain information would be of value to competitors. However, these explanations are being used to prevent the discovery of the deception and anticompetitive practices that are occurring.
   
   The strength and extent of efforts on the part of CVS and others to prevent disclosure of secretive financial practices and policies invite suspicion that certain of their activities may be unethical, fraudulent, and even illegal, in addition to being anticompetitive. Should the provision and operation of programs that are funded by taxpayers and our government not be completely transparent? As a taxpayer and Medicare participant, I am outraged that my tax dollars have been used for the enrichment of executives of CVS and related companies. The potential for these abuses will become even worse if they are permitted to get even larger and I strongly urge you to rule against the acquisition of Aetna by CVS. We depend on our legislators, government agencies, and members of the judiciary to protect the interests of patients/consumers by preserving competition in the marketplace. It is very unfortunate that the Federal Trade Commission/Department of Justice had incomplete information and/or overlooked important considerations with regard to how the combination of CVS and Aetna would significantly harm competitors and consumers.
   
   I know that there are conditions under which you have allowed the CVS acquisition of Aetna to proceed while you study this matter. However, CVS executives are stating that CVS and Aetna are one company, and that CVS is rolling out new services for Aetna members. These statements are extremely misleading, and arrogantly disrespectful to you and your authority for reviewing and approving the acquisition that is still pending.
   
   Thank you for your recognition of the importance of these issues and your willingness to investigate them further.