Change to Win Study Shows Drug Manager CVS Caremark Charges More for Generic Drugs to Federal Employees and US Government than Walk-in Customers

A new study released today by Change to Win shows that pharmacy benefits manager CVS Caremark charges its largest customer – the US government – and millions of federal employees more for hundreds of generic drugs than participants in its retail generics discount program.

The study, “CVS Caremark’s Generic Rip Off,” compares drug prices paid by the federal government and its employees covered by CVS Caremark through the Federal Employee Program (FEP) to drug prices for individuals using CVS’s generics discount program available at its retail pharmacies. This program – the “Health Savings Pass” (HSP) – is available to anyone who enrolls and makes many generic prescriptions available for $9.99 for a 90-day supply.

In comparing these sets of prices, researchers found that the federal government and FEP plan participants paid more for 85% of the generic drugs available in CVS’s generics discount program. In some cases, the differences were significant – sometimes more than three times as much as the prices for individuals using CVS’s $9.99 generics discount program. The report shows that if CVS Caremark offered the government and federal employees its publicly available $9.99 generic discount program price, taxpayers and federal workers could save hundreds of millions of dollars.

“It’s the job of pharmacy benefit managers like CVS Caremark to negotiate the lowest possible price on prescription drugs for their clients,” said Jasmin Weaver of Change to Win. “So why is the company charging federal employees, the US government and thus American taxpayers more than it charges an individual who is not even using insurance?”

Nearly five million federal employees, retirees and their dependents are covered by CVS Caremark through the FEP, which generates over $4 billion of annual revenue for the company.

Findings Underscore Need for PBM Reform within FEHBP

The findings released today emphasize the need for reform in the way pharmacy drug benefits are managed within the larger Federal Employees Health Benefits Program (FEHBP). Moreover, the price differentials suggest broader problems with CVS Caremark’s transparency and accountability and reiterate the FEHBP’s need for PBM reform. In January, Representative Stephen Lynch (D-MA) introduced legislation that, if passed, would reform contracts between health insurers that cover federal employees through the FEHBP and pharmacy benefit managers (PBMs). The “FEHBP Prescription Drug Integrity, Transparency, and Cost Savings Act” provides for greater oversight to ensure plan participants receive the lowest drug prices and prohibits the FEHBP from contracting with companies that operate both a PBM and retail pharmacies.

CVS Caremark’s higher prices under the federal prescription plan call into question whether the company is really acting in the financial interests of its largest client – the US government – and whether the PBM-retailer model creates value for plan participants.

Click here to download a copy of the full report, “CVS Caremark’s Generic Rip Off.”

Alarmed About CVS Caremark is a Change to Win initiative to educate consumers, health plan managers and trustees about CVS Caremark, the country's largest pharmacy benefits manager (PBM) and largest retail pharmacy chain. Our reports, CVS Caremark: An Alarming Prescription and CVS Caremark: An Alarming Merger, detail the troubling patterns exhibited by both CVS and Caremark prior to their merger, and explores the new risks presented by the merged entity CVS Caremark.

About Change to Win

Change to Win is a six million member partnership of unions founded in 2005 to represent workers in the industries and occupations of the 21st century economy. Change to Win is committed to restoring the American Dream for a new generation of workers – wages that can support a family, affordable health care, a secure retirement, and the opportunity for the future. The affiliated unions are: Service Employees International Union, United Food and Commercial Workers International Union, International Brotherhood of Teamsters, Laborers' International Union of North America, and United Farm Workers of America.