FTC reviewing CVS Caremark practices

The drugstore chain and pharmacy benefits manager did not disclose the details of the “nonpublic investigation,’’ but said it has not violated any antitrust laws. CVS suggested the FTC inquiry is connected to complaints made by the Change to Win coalition of labor unions. Change to Win has said CVS Caremark’s size and buying power are bad for consumers, and accused CVS of a stocking expired products and violating patients’ privacy, among other issues.

Change to Win also opposed CVS’s acquisition of Longs Drugs Stores last year. The Woonsocket, R.I., company said the turmoil began in early 2007, when the coalition began trying to unionize CVS employees.

“We think there are serious issues with the company,’’ Change to Win spokesman Ahmer Qadeer said. “We think there’s a real question of privacy problems, how they may use patient data, and real questions with this business model.’’

Also yesterday, CVS disclosed more multibillion dollar contract losses in its pharmacy benefits management business and said the head of the unit will depart. Chief executive Tom Ryan said CVS won’t reach its goals in 2010 because of the sharp reversal of fortunes at the Caremark unit, which administers drug benefits for employers.

CVS said third-quarter profit jumped 39 percent to $1.02 billion. Revenue rose 18 percent to $24.64 billion. But the company lost about $2 billion in 2010 revenue in the last three months. It now believes Caremark has lost $4.8 billion in contracts for next year.

Ryan said profits at Caremark could drop as much as 10 or 12 percent compared with 2009. Three months ago, Ryan said CVS would be “very disappointed’’ if its total per-share profit did not grow 13 to 15 percent next year. He said CVS won’t reach that level.

Caremark president Howard McLure will retire Nov. 27, with Ryan taking over temporarily. McLure, 52, became Caremark’s chief operating officer in 2005, and was named president when CVS bought Caremark. CVS said McLure had planned to retire for several months.

A month ago, the company said it expected to lose coverage of a large number of Medicare Part D drug benefit members who are also eligible for Medicaid. CVS is losing about 500,000 of the “dual eligibles,’’ which will cost $1.7 billion in revenue. It said other companies were more aggressive and outbid CVS to win that coverage. It also lost contracts with the states of New Jersey and Ohio. Earlier this year, health insurer Coventry Health Care Inc. said it would not renew a contract with CVS. Retired employees of automaker Chrysler also turned elsewhere.

Those clients cited pricing and customer service as key reasons for taking their business elsewhere, Ryan said. Other clients said they wanted to work with a smaller pharmacy benefits manager or one that did not also own a drugstore chain.