Drugstores Give Up Gains

CVS, Walgreen and Rite Aid give up yesterday's gains, as CVS faces charges of waging unfair competition for customers.
Author:
Publish date:

It was an active day in the drug store world, as

CVS

(CVS) - Get Report

,

Walgreen

(WAG)

and

Rite Ai

(RAD) - Get Report

gave up yesterday's big gains.

CVS Caremark was accused on Wednesday of waging unfair competition for customers through co-payment manipulation and the use of sensitive patient information

An association of independent pharmacists said the company uses the possibility of higher co-payments to persuade customers to switch to a CVS store or its mail-order business from community drug stores.

The association provided several examples of letters it said were sent from CVS to pharmacy customers telling them that prescriptions will either no longer be filled at another store or they will be subjected to higher co-payments -- and also said patients who have never shopped at CVS have suddenly started receiving marketing materials from the company and, in some cases, had prescriptions filled without their knowledge.

Shares of the company dropped 3% to close at $31.95.

Separately, pharmacy-benefits manager Medco Health Solutions announced on Wednesday that prescription drug use in the U.S. fell last year, although total spending on drugs increased 3.3%, as prices rose sharply on brand-name products.

Medco said the overall decline in prescriptions was the first in a decade. The company, which handles drug benefits covering about 60 million people, said total prescription use was down because not as many new drugs were launched last year, popular drugs like Zyrtec became available sans prescription and some drugs faced safety issues that led to decreased use.

The jump in spending predominantly came from a greater use of "specialty" drugs, which often treat chronic or complex illnesses.

Walgreen saw shares decline 4% to $30.16, while Rite Aid tumbled 5% to close at $1.09.

Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.