WASHINGTON (CN) - Pharmacy giant CVS Caremark will pay $5 million to settle Federal Trade Commission charges that it misrepresented the costs of certain drugs to Medicare beneficiaries.
The FTC claims that Caremark subsidiary RxAmerica misrepresented the prices beneficiaries would pay for drugs purchased at CVS and Walgreen pharmacies from 2007 to 2008.
In some cases, customers were charged 10 times the price RxAmerica quoted on its website for drugs, including those used to treat epilepsy and symptoms of breast cancer.
To obtain Medicare Part D prescription drug benefits, beneficiaries must enroll in a private drug plan approved by the Centers for Medicare & Medicaid Services. The FTC says most beneficiaries select their drug plan based on the plan's published prices for drugs and are locked into their plan for one year.
When overpayments use up all of some customers' annual benefit, the FTC says they get pushed into the dreaded "donut hole" of Medicare coverage in which the beneficiary is responsible for the entire cost of his prescriptions.
The proposed settlement bars Caremark from misrepresenting the prices of drugs covered under Medicare Part D. The company will also have to identify every customer who was overcharged so that the FTC can send them refunds from the $5 million fine.
The FTC will accept public comment on the proposed consent order for 30 days after the order is published in the Federal Register.
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