FTC investigates Rx marketing

Drug Store News, Nov 4, 2002 by Michael Johnsen

WASHINGTON -- The Federal Trade Commission has opened an inquiry into chain pharmacy marketing practices, requesting refill-reminder material and targeted consumer education mailings regarding new drug therapies.

The FTC requeste material from Longs Drug Stores, Rite Aid and Walgreens between mid-September and early October. Neither CVS nor Eckerd have received letters from the FTC requesting any materials, officials at each company stated. Duane Reade officials could not be reached for comment.

"The U.S. Federal Trade Commission commenced an investigation of us on Sept. 11, 2002, of matters relating to consumer privacy and advertising practices," Rite Aid stated in a filing with the Securities and Exchange Commission.

"The FTC has asked us for documents pertaining to refill reminders we make to our patients, whether by phone or by letter, as well as education materials that we send to patients about drugs, including safety information," noted Rite Aid spokeswoman Karen Rugen.

"[The FTC] is looking for information on our customer privacy and marketing policies. We are preparing a response to that," confirmed Michael Polzin, a Walgreens spokesman. Once the FTC reviews that response, any concerns they may have should be alleviated, he added.

Indeed, the inquiries should have no real impact on pharmacy operations, said Neil Currie, a securities analyst at UBS Warburg. "The worst thing [the FTC] can do is to tell [drug store operators] to stop" mailing refill reminders and pharmacy communications to their customers, he said. Even if that should come to pass, there would be no lasting impact on pharmacy sales, Currie said. 'It's on the fringe of [the pharmacy] business. I can't see [this] materially impacting sales," he said.

The inquiries may just be a voir dire of sorts, with the FTC examining a cross-section of chain drug pharmaceutical marketing policies as a preliminary peek into common practices, rather than a full-blown investigation into any wrongdoings.

The FTC confirmed only its investigation of Rite Aid, and it did so only because Rite Aid had disclosed the investigation publicly.

FTC spokeswoman Claudia Farrell declined to comment further.

One of the issues being considered is whether such mailings constitute an invasion of a consumer's privacy. "Our policy is that we do not share any patient identifiable information with anyone outside the company for marketing purposes," commented Polzin. Polzin said the chain's expenses for mailing to its pharmacy customers are not always reimbursed. "In some cases, not all, we may get reimbursed for that cost by the manufacturer. ... We just started a diabetes compliance pro ram that includes both brand name and generic medication. It cuts across the whole disease state, and we're not receiving one penny from any manufacturer for that program."