COUNCIL OF THE DISTRICT OF COLUMBIA WASHINGTON. D.C.

20004

July 20, 2011 Irvin B. Nathan Attorney General District of Columbia Office of the Attorney General 441 4th Street, NW Washington, DC 20001

Re:

Request for Investigation : Neighborhood Pharmacies and Fair Competition

Dear Mr. Nathan: I am writing to request that you open a formal investigation into the circumstances surrounding CVS Caremark Corporation's termination of P&M Pharmacy, Inc., which does business as Cathedral Pharmacy, from its CVS pharmacy benefits manager provider network, as well as the larger unfair trade practices issues these facts suggest. Cathedral Pharmacy and its sole owner, Michael Madden, have served the citizens of Ward 3 for 38 years. In fact, a neighborhood pharmacy in that locale has provided for District of Columbia residents since 1924. According to published reports and available court documents, in August of 2010 CVS performed an audit on Cathedral focusing on antiretroviral drugs used for the treatment of AIDS. Cathedral participates in a federally funded program, called the AIDS Drug Assistance Program (ADAP), and receives the same AIDS drugs from the D .C. Department of Health for qualifying patients as it does from private sources for private customers using a pharmacy benefits manager (PBM) such as CVS. According to court papers, the ADAP drugs automatically replenish without any "invoicing," while the private AIDS drugs are invoiced when new supply is purchased from drug wholesalers. CVS notified Mr. Madden that due to "discrepancies" in the audit performed by CVS, his provider status within the CVS network would be terminated . In response, Mr. Madden explained the distinction bet\veen invoices for private product and "manifests" for ADAP replenishments. CVS has now terminated Cathedral from its provider network . It is my understanding that terminations of this nature have received numerous complaints nationwide. There is substantial concern that CVS is using its audit process as a means to eliminate small, local pharmacies. (See http: / /tinyurl.com / 25jom3t; See a/Jo / / www.nytimes.com / 2011 / 04 / 15 / business / 15cvs.html). Therefore, I request a formal investigation for the following reasons:

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The citlZens of the District, particularly the elderly and infirm, have a substantial interest in the health and vitality of neighborhood pharmacies that offer personalized customer service that large retail chains cannot match;

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The citizens of the District have a substantial interest in consumer choice. While large retail chains may be that choice for many citizens, others who would prefer personalized services from a tlUsted neighborhood practitioner deserve to have that choice; CVS' alleged conduct -- if proven -- may well constitute violations of the District's antitrust laws and unfair trade practices (including the common law); and CVS's actions as PBM raise significant concerns regarding data-mining and the potential for abuse of that data. For example, in Cathedral's case, CVS is both Cathedral's largest PBM (with access to some of it most sensitive data) and its largest retail pharmacy competitor. The data-mining issue goes beyond fair competition, however, to include privacy concerns and improper uses of an individual's most sensitive medical data -- all issues that I believe deserve your full attention.

Thanks for your attention to this matter-at stake are important issues of public health, consumer choice, and fair competition. Please let me know if you need anything further from me.

Best regards,

Mary M. Cheh Chairman Pro Tempore, Councilmember, Ward 3