According to a press release dated November 17, 2009, the complaint charges CVS and certain of its officers and directors with violations of the Exchange Act. CVS, since its March 2007 $22 billion acquisition of pharmacy benefits manager Caremark Rx Inc. (“Caremark”), is a fully integrated pharmacy services company and operates in two business segments: pharmacy services and retail pharmacy. The pharmacy services business includes CVS’s pharmacy benefit management business, commonly known as the PBM business, which was acquired in the Caremark acquisition in 2007. The PBM business is the principal component of the pharmacy services business segment.
The complaint alleges that, throughout the Class Period, defendants made numerous positive statements regarding the Company’s financial condition, business and prospects. The complaint further alleges that CVS failed to disclose operating problems in the PBM business, the more than $6 billion in contractual losses for 2010 and the adverse impact this would have on its 2010 financial results. According to the complaint, CVS belatedly disclosed that the Federal Trade Commission (“FTC”) had begun a “nonpublic investigation” in August 2009 into whether CVS’s business practices and service offerings violated antitrust laws. Among the business practices of CVS that the FTC is reportedly investigating is the improper use of pricing and patient data from its retail pharmacy operations to steer its PBM members to CVS stores.
On November 5, 2009, CVS issued a press release announcing the disclosures of the adverse material facts concerning the PBM business and their adverse impact on CVS's financial results for 2010, and the FTC investigation. In response to this press release, the price of CVS common stock fell 20% to close at $28.87.
On March 01, 2010, an order granting the plaintiffs Motion to Appoint Lead Plaintiff and Approving Selection of Law and Liaison Counsel was entered into the Court’s record.
On May 03, 2010, an Amended Complaint / Consolidated Class Action Complaint was filed by the lead plaintiffs against the defendants.
On June 01, 2010, an Amended Complaint / Corrected Consolidated Class Action Complaint was filed by the lead plaintiffs against the defendants.
On June 14, 2012, the Court issued an Order granting defendants' motion to dismiss. The clerk was directed to enter judgment accordingly and close this case.
On May 24, 2013, the United States Court of Appeals For the First Circuit issued a ruling on appeal, vacating the district court's dismissal and remanding for further proceedings.
On December 30, 2013, the Court issued an Order denying the defendants' motion to dismiss.
On August 24, 2015, the parties entered into a Stipulation of Settlement. Preliminary approval was granted on November 9. Final approval was granted on February 29, 2016.