Last week, the Federal Trade Commission ("FTC") announced that CVS Caremark Corporation
("CVS") will pay $5 million to settle claims that it
misrepresented the actual prices of certain Medicare drugs.
The FTC alleged that CVS advertised prescription drug prices on
its own websites and other Medicare- and Medicaid-sanctioned
websites that were as much as ten times less than what consumers
were actually charged.
The Centers for Medicare & Medicaid Services offers a web
tool that calculates an individual's estimated drug costs based
on Medicaid-sanctioned prescription drug providers' advertised
prices. The FTC alleged that consumers chose to buy from CVS based
on the competitive pricing advertised through this web tool, but
then were ultimately forced to pay higher prices at the
FTC Chairman Jon Leibowitz said, "With the cost of health
care on the rise, the FTC is especially focused on protecting
consumers from any deceptive claims that would cause them to pay
more than they should." Significantly, the allegations
affected older and disabled Americans – classes of
individuals of whom the FTC is particularly protective.
The proposed settlement (which will be open for public comment
until February 13, 2012) requires CVS to pay $5 million to the FTC.
The FTC will mail checks to eligible harmed consumers.
As demonstrated in this case, health-related issues, as well as
consumers' financial health, continue to be a key focus of the
FTC's enforcement efforts. The FTC's allegations about
deceptive pricing practices are also a powerful reminder for
advertisers to ensure that offer terms are accurate and fully
disclosed both in their own advertising as well as in partner
This alert provides general coverage of its subject area. We
provide it with the understanding that Frankfurt Kurnit Klein &
Selz is not engaged herein in rendering legal advice, and shall not
be liable for any damages resulting from any error, inaccuracy, or
omission. Our attorneys practice law only in jurisdictions in which
they are properly authorized to do so. We do not seek to represent
clients in other jurisdictions.
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Following close on the heels of Savetsky, the U.S. District Court for the Central District of California in Friedman et al. v. Guthy-Renker, LLC, Case No. 2:14-CV-06009-ODW (C.D. Cal. Feb. 27, 2015), reached a similar result.
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