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Chapter 19: CVS: “Fired Up” about Social Responsibility: 19-2b Deceptive Business Practices Book Title: Business Ethics: Ethical Decision Making and Cases Printed By: Kennisha Holloman (kholloman@grantham.edu) © 2019 Cengage Learning, Cengage Learning
19-2b Deceptive Business Practices
In addition to privacy challenges, CVS has been accused of deceptive business practices. A
2008 civil lawsuit involving 28 states was filed against the personal benefits management
division of CVS, which acts as the prescription drug claim intermediary between employers
and employees. It also maintains relationships with drugstores and manufacturers. The
allegations of the lawsuit included urging doctors to switch patients to name brand
prescriptions under the notion that it would save them money. Furthermore, these switches
were encouraged without informing doctors of the financial burden it would impose on
patients, and employer health care plans were not informed that this activity would benefit
CVS. This could be seen as a conflict of interest at the expense of customers. Due to these
allegations, the suit called for a revision in how the division gives information to consumers.
In the end, CVS signed a consent decree without admitting fault and paid a settlement of
$38.5 million to reimburse states for the legal costs and patients overcharged due to the
switch in prescriptions. In a similar matter, a multi-year-long FTC investigation concluded in
2009 that the company had misled consumers regarding prices on certain prescriptions in
one of its Medicare plans. The switch harmed elderly customers who were billed up to 10
times the amount they anticipated. CVS settled with the FTC for $5 million to reimburse
customers for the change in price.
Chapter 19: CVS: “Fired Up” about Social Responsibility: 19-2b Deceptive Business Practices Book Title: Business Ethics: Ethical Decision Making and Cases Printed By: Kennisha Holloman (kholloman@grantham.edu) © 2019 Cengage Learning, Cengage Learning
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