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 register.
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 advertising.
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