Home > Regulation > Labor Day Ode: Should Consumer Privacy be part of Antitrust Analysis?

Labor Day Ode: Should Consumer Privacy be part of Antitrust Analysis?

After our summer of discontent over healthcare reform, this Labor Day I thought it was particularly appropriate to write about the recent letter, sent by Change to Win, (a coalition of 6 labor unions representing over 6 million workers), urging the FTC to re-examine the 2007 merger of CVS and Caremark.  This follows concerns expressed by National Community Pharmacists Association, as well as several letters sent by Senators to FTC Chairman Jon Leibowitz, asking him to take a second look at the merged entity.

Why am I writing about a health-care merger in a blog that’s mainly focused on tech policy and regulation?  Because a primary issue at the center of this growing controversy – CVS-Caremark’s handling of private patient data – raises an unresolved question for regulators: should consumer privacy be part of antitrust analysis when considering merger or conduct involving companies who have access to sensitive user data?  The answer to this question will ultimately have significant impact on all companies doing business on the Internet.

In their November 2008 report, Change to Win discusses how CVS-Caremark – the largest provider of prescriptions in the United States – has “unprecedented access” to private patient information (including pricing information).  This access allows CVS-Caremark to sell patient data to third parties (including insurance companies who then use the data to deny patient claims), and to promote drugs – both on behalf of pharmaceutical companies and to doctors.  In addition, the report suggests that Caremark (one of the country’s largest “pharmacy benefit managers”) routinely shares patient prescription data with its retail arm CVS to increase sales of both healthcare and non-healthcare related products.

Change to Win is not alone in their assessment of CVS-Caremark’s practices. In their letter to the FTC, Senators Byron Dorgan, Russ Feingold and Amy Klobuchar write that the merger has created a “heightened opportunity for anticompetitive conduct in the prescription drug market.”

The last time the FTC looked at consumer privacy within the context of a merger was also the first time the Commission had really been presented with the issue – the 2007 examination of Google’s acquisition of DoubleClick.  After an 8-month investigation, the FTC approved the transaction.  FTC Commissioner Pamela Jones-Harbour (the lone dissenter), expressed concern over a merger that would “combine not only the two firms’ products and services, but also their vast troves of data about consumer behavior on the Internet.”  At least with regard to CVS-Caremark, her words may have been incredibly prescient.  And, if the FTC does choose to re-examine the CVS-Caremark merger, the interplay between consumer privacy and merger efficiencies will be closely watched.

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