CVS Caremark Statement on State Settlement
February 14, 2008
The Company's AdvancePCS (now known as CaremarkPCS) and Caremark subsidiaries have entered into a settlement agreement and consent order with 28 states and the District of Columbia. In entering the settlement, they have expressly denied any and all allegations, and there has been no finding of wrongdoing or inappropriate business conduct on their part.
The Company has agreed to pay $12 million in settlement on behalf of legacy AdvancePCS, $10 million in settlement on behalf of legacy Caremark, $16.5 million in state investigative costs and up to $2.5 million as reimbursement for certain medical tests. The mutually agreed consent order requires AdvancePCS and Caremark to maintain certain PBM business practices and will not result in significant changes to current business practices. In that regard, the Company is committed to driving value for its clients and plan participants by effectively managing pharmaceutical costs and improving health care outcomes
The Company has agreed to enter into the settlement to confirm its continued commitment to compliance with state consumer protection laws in serving the pharmacy benefit needs of its PBM clients and their participants and to avoid the uncertainty and expense of the investigation. The amounts to be paid were previously accrued for by legacy Caremark in prior fiscal periods, so the settlement will not affect the 2008 financial results of the Company.