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January 19th, 2012
CVS to Pay FTC $5 Million to Settle Deceptive Pricing Charges
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.
Read FTC's full press release- CVS Caremark Corporation Settles FTC Deceptive Pricing Charges.
If you have any questions about the proposed settlement or other advertising or marketing law issues, please contact Jeffrey Greenbaum at jgreenbaum@fkks.com, or any other member of the Frankfurt Kurnit Advertising Group.
Other Advertising Law Alerts
What the Advertising Industry Can Learn from Kim Kardashian’s Settlement with the SEC
On October 3, 2022, the Securities and Exchange Commission (SEC) announced that it entered into a $1.26 million settlement with Kim Kardashian over her social media promotion of the EMAX token without disclosing payment she received from token issuer, EthereumMax. The matter provides important lessons for advertisers. Read more.
October 10 2022
Get Ready for California’s New “Automatic Renewal” Rules
California recently amended its Automatic Purchase Renewals law. The amended statute - effective July 1st -- require marketers to provide consumers of automatic renewal or continuous service offers with more information and easier ways to terminate. Read more.
June 22 2018
“Made in the U.S.A.” Claims Continue to be Scrutinized
In 2016, California amended Section 17533.7 of the California Business and Professions Code ("Section 17533"), liberalizing the standard for selling products labeled "Made in U.S.A" to California consumers. Read more.
June 4 2018
