Money & Business

CVS Draws Criticism Over Anti-Tobacco Copay Plans

By / Oct 23, 2014 (iStock Editorial/Thinkstock)

Having won praise earlier this year after it stopped selling tobacco products, the pharmacy chain is now drawing criticism from independent pharmacy groups over new copay plans that, according to the groups, discourage people from filling prescriptions at pharmacies other than CVS.

Earlier this year, the pharmacy giant CVS Health won plaudits from the medical community for its decision to stop selling cigarettes in its stores.

But the decision, which leaves roughly $2 billion in yearly revenue on the table, comes with a follow-up move that’s drawing mixed reviews. The company recently announced a new plan through its pharmacy benefits-management division, Caremark. If implemented, it would require consumers to pay higher copays at pharmacies that sell tobacco products. Because Caremark provides prescription drug programs for many employers and unions, this change could have wide effects, and consumers who go to competing chains such as Walgreens could see additional copays of up to $15 per prescription.

CVS says that the new policy, which will launch in early 2015 with the city of Philadelphia as its first client, was driven by customer requests.

“Following our tobacco announcement, some of our clients—large employers—had begun speaking with us about a tobacco-free network,” CVS spokeswoman Carolyn Castel told the Chicago Tribune. “In that circumstance, there would be a more favorable copay in the tobacco-free network versus if a plan member … chose to fill at a pharmacy that did sell tobacco.”

But the move nonetheless drew criticism from associations in the pharmacy space, with some groups saying the strategy helps CVS and hurts small-scale local pharmacies. Critics say that the plan creates confusion in the marketplace for consumers looking to avoid large copays.

An “Unfair” Strategy?

The National Community Pharmacists Association, for example, suggested that the move paints other pharmacies inaccurately.

“Nearly all independent pharmacies have not sold tobacco products for years, even decades,” NCPA spokesman John Norton told the Tribune. Caremark “should inform consumers of that so they can choose between independent and other qualified pharmacies on a level playing field.”

John Giampolo, president of the Independent Pharmacy Alliance of America, Inc., agreed, telling the Wall Street Journal [subscription] that the strategy constitutes an “unfair competitive practice.”

“Consider a local pharmacy that hasn’t carried tobacco for years, but the consumer may not know whether the pharmacy participates or not,” Giampolo said. “So a consumer may go to a CVS pharmacy to save the $15. An independent pharmacy may have to scramble to do their own marketing.”

While CVS emphasizes that it will eventually release lists of qualifying pharmacies, the controversy echoes other claims of anticompetitive conduct since the company acquired Caremark in 2007. In the past, the Federal Trade Commission has targeted CVS because of complaints that it used Caremark to drive consumers to its stores.

Ernie Smith

Ernie Smith is the social media journalist for Associations Now, a former newspaper guy, and a man who is dangerous when armed with a good pun. More »

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