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CVS Accused in Suit of Selling Customer Data to Drugmakers

CVS Caremark Corp., the largest U.S. provider of prescription drugs, was sued over claims it used confidential prescription information to push products on behalf of pharmaceutical makers.

CVS violated the privacy and rights of consumers by sending letters to customers’ physicians that promoted specific medications, according to a complaint filed March 7 in state court in Philadelphia. CVS allegedly identified consumers by name, date of birth and medications taken, drawing on information obtained through CVS pharmacy services.

CVS was paid for the promotion of competing drugs by Merck & Co., AstraZeneca Plc (AZN) and Bayer AG (BAYN), according to the complaint filed by Richboro, Pennsylvania, resident Arthur Steinberg and the Philadelphia Federation of Teachers Health and Welfare Fund.

“While touted as an ‘RxReview Program’ by defendant CVS Caremark, in reality the physician communications were nothing more than a profit-making opportunity,” Steinberg said in the complaint.

CVS has been plagued by privacy concerns since its purchase of Caremark Rx Inc., a pharmacy-benefits manager, for about $22 billion in 2007. Steinberg’s suit follows a similar complaint filed in September by a group of Texas pharmacies accusing the company of violating privacy and racketeering laws.

Civil Charges

In February 2009, the company agreed to pay $2.25 million to settle federal charges its employees compromised customer privacy by throwing prescription records and drug bottles into open trash dumpsters. The payment to the government settled civil charges CVS violated the Health Insurance Portability and Accountability Act, the medical privacy law known as HIPAA.

Steinberg and the fund accuse CVS of unjust enrichment and violating unfair trade practices and consumer protection laws. They’re seeking unspecified damages and class action status for the case.

CVS hasn’t been served with the complaint and can’t comment on the claims, Christine Cramer, a spokeswoman for the Woonsocket, Rhode Island-based company said in an e-mailed statement.

“CVS Caremark places a high priority on protecting the privacy of our customers and members,” Cramer said.

Rosemarie Yancosek, a spokeswoman for Bayer Healthcare, declined to comment. AstraZeneca spokesman Tony Jewell and Ron Rogers, a Merck spokesman, had no immediate comment.

CVS, which fills about 1 billion prescriptions a year, was sued last month by IMS Health Inc. in Delaware Chancery Court for allegedly violating contracts to supply drug-sales data. IMS, which didn’t disclose contract terms, collects data from pharmacies for use by drug companies, marketers, and government agencies for research, sales and compliance.

The case is Arthur Steinberg v. CVS Caremark Corp. (CVS), 1103012286, Court of Common Pleas of Philadelphia County.

To contact the reporter on this story: Sophia Pearson in Philadelphia at spearson3@bloomberg.net

To contact the editor responsible for this story: David Rovella at drovella@bloomberg.net

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