Loyalty Strained at Caremark

"Wall Street may only care about the bottom line," Burns said. "But the people who award these contracts don't want their own reputations besmirched by doing business with a company that's not transparent ... (and) under suspicion of fraud."

Caremark has denied any wrongdoing. The company's stock, a favorite among analysts, added 30 cents to $39.20 Monday.

Deep Secrets

By now, all three major PBMs -- Caremark, Medco and ExpressScripts (ESRX Quote) -- have come under government fire.

The companies claim to save their clients large sums of money by using their bulk purchasing power to negotiate deep discounts from drug manufacturers. But a growing crowd of industry critics, pointing to the rocketing cost of prescription drugs, have voiced their doubts. They believe the PBMs are unfairly keeping much of the savings for themselves.

Indeed, a recent survey by Hewitt Associates showed that only 53% of employers believe that PBMs lower prescription drug costs -- and that nearly one-quarter believe the PBMs raise the costs instead.

The industry, citing multiple government reports, insists otherwise. But it also refuses to disclose contract information that could help prove its case. In fact, Caremark is currently seeking a court order to block the release of terms of its contract in Illinois.

The state comptroller has access to the information and believes that it should be made public. Meanwhile, state lawmakers have also expressed concern about what they view as a "secret" government contract.

"This is public stuff," declared Peter Roskam, Senate Republican whip in Illinois. "It is a large contract that affects a lot of employees, and the question just becomes: "If this is such a great deal, why not disclose the information?"