CVS Caremark Corporation; Analysis of Proposed Consent Order to Aid Public Comment, 12870-12871 [E9-6484]

Agencies

• FEDERAL TRADE COMMISSION

[Federal Register Volume 74, Number 56 (Wednesday, March 25, 2009)]
[Notices]
[Pages 12870-12871]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-6484]



[[Page 12870]]

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FEDERAL TRADE COMMISSION

[File No. 072 3119]


CVS Caremark Corporation; Analysis of Proposed Consent Order to 
Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices or unfair methods of competition. The attached Analysis to 
Aid Public Comment describes both the allegations in the complaint and 
the terms of the consent order--embodied in the consent agreement--that 
would settle these allegations.

DATES: Comments must be received on or before March 27, 2009.

ADDRESSES: Interested parties are invited to submit written comments 
electronically or in paper form. Comments should refer to``CVS 
Caremark, File No. 072 3119'' to facilitate the organization of 
comments. Please note that your comment--including your name and your 
state--will be placed on the public record of this proceeding, 
including on the publicly accessible FTC website, at (https://www.ftc.gov/os/publiccomments.shtm).
    Because comments will be made public, they should not include any 
sensitive personal information, such as an individual's Social Security 
Number; date of birth; driver's license number or other state 
identification number, or foreign country equivalent; passport number; 
financial account number; or credit or debit card number. Comments also 
should not include any sensitive health information, such as medical 
records or other individually identifiable health information. In 
addition, comments should not include any ``[t]rade secret or any 
commercial or financial information which is obtained from any person 
and which is privileged or confidential. . . .,'' as provided in 
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and Commission Rule 
4.10(a)(2), 16 CFR 4.10(a)(2). Comments containing material for which 
confidential treatment is requested must be filed in paper form, must 
be clearly labeled ``Confidential,'' and must comply with FTC Rule 
4.9(c).\1\
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    \1\ FTC Rule 4.2(d), 16 CFR 4.2(d). The comment must be 
accompanied by an explicit request for confidential treatment, 
including the factual and legal basis for the request, and must 
identify the specific portions of the comment to be withheld from 
the public record. The request will be granted or denied by the 
Commission's General Counsel, consistent with applicable law and the 
public interest. See FTC Rule 4.9(c), 16 CFR 4.9(c).
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    Because paper mail addressed to the FTC is subject to delay due to 
heightened security screening, please consider submitting your comments 
in electronic form. Comments filed in electronic form should be 
submitted by using the following weblink: (https://secure.commentworks.com/ftc-CVSCaremark) (and following the 
instructions on the web-based form). To ensure that the Commission 
considers an electronic comment, you must file it on the web-based form 
at the weblink: (https://secure.commentworks.com/ftc-CVSCaremark). If 
this Notice appears at (https://www.regulations.gov/search/index.jsp), 
you may also file an electronic comment through that website. The 
Commission will consider all comments that regulations.gov forwards to 
it. You may also visit the FTC website at https://www.ftc.gov to read 
the Notice and the news release describing it.
    A comment filed in paper form should include the ``CVS Caremark, 
File No. 072 3119`` reference both in the text and on the envelope, and 
should be mailed or delivered to the following address: Federal Trade 
Commission, Office of the Secretary, Room H-135, 600 Pennsylvania 
Avenue, NW, Washington, DC 20580. The FTC is requesting that any 
comment filed in paper form be sent by courier or overnight service, if 
possible, because U.S. postal mail in the Washington area and at the 
Commission is subject to delay due to heightened security precautions.
    The Federal Trade Commission Act (``FTC Act'') and other laws the 
Commission administers permit the collection of public comments to 
consider and use in this proceeding as appropriate. The Commission will 
consider all timely and responsive public comments that it receives, 
whether filed in paper or electronic form. Comments received will be 
available to the public on the FTC website, to the extent practicable, 
at (https://www.ftc.gov/os/publiccomments.shtm). As a matter of 
discretion, the Commission makes every effort to remove home contact 
information for individuals from the public comments it receives before 
placing those comments on the FTC website. More information, including 
routine uses permitted by the Privacy Act, may be found in the FTC's 
privacy policy, at (https://www.ftc.gov/ftc/privacy.shtm).

FOR FURTHER INFORMATION CONTACT: Alain Sheer or Loretta Garrison, 
Bureau of Consumer Protection, 600 Pennsylvania Avenue, NW, Washington, 
D.C. 20580, (202) 326-2252.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Sec.  2.34 the 
Commission Rules of Practice, 16 CFR 2.34, notice is hereby given that 
the above-captioned consent agreement containing a consent order to 
cease and desist, having been filed with and accepted, subject to final 
approval, by the Commission, has been placed on the public record for a 
period of thirty (30) days. The following Analysis to Aid Public 
Comment describes the terms of the consent agreement, and the 
allegations in the complaint. An electronic copy of the full text of 
the consent agreement package can be obtained from the FTC Home Page 
(for February 18, 2009), on the World Wide Web, at (https://www.ftc.gov/os/2009/02/index.htm). A paper copy can be obtained from the FTC Public 
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW, Washington, 
D.C. 20580, either in person or by calling (202) 326-2222.
    Public comments are invited, and may be filed with the Commission 
in either paper or electronic form. All comments should be filed as 
prescribed in the ADDRESSES section above, and must be received on or 
before the date specified in the DATES section.

Analysis of Agreement Containing Consent Order to Aid Public Comment

    The Federal Trade Commission has accepted, subject to final 
approval, a consent agreement from CVS Caremark Corporation (``CVS'').
    The proposed consent order has been placed on the public record for 
thirty (30) days for receipt of comments by interested persons. 
Comments received during this period will become part of the public 
record. After thirty (30) days, the Commission will again review the 
agreement and the comments received, and will decide whether it should 
withdraw from the agreement and take appropriate action or make final 
the agreement's proposed order.
    The Commission's proposed complaint alleges that CVS is in the 
business of selling prescription and non-prescription medicines and 
supplies, as well as other products. It operates, among other things, 
approximately 6,300 retail pharmacy stores in the United States 
(collectively, ``CVS pharmacies'') and online and mail order pharmacy 
businesses. The company allows consumers buying products in CVS 
pharmacies to pay for

[[Page 12871]]

their purchases with credit, debit and electronic benefit transfer 
cards; insurance cards; personal checks; or cash.
    The complaint alleges that in conducting its business, CVS 
routinely obtains information from or about its customers, including, 
but not limited to, name; telephone number; address; date of birth; 
bank account number; payment card account number and expiration date; 
driver's license number or other government-issued identification; 
prescription information, such as medication and dosage, prescribing 
physician name, address, and telephone number, health insurer name, and 
insurance account number and policy number; and Social Security number. 
The company also collects and maintains employment information from its 
employees, which includes, among other things, Social Security numbers.
    The complaint further alleges that CVS engaged in a number of 
practices that, taken together, failed to provide reasonable and 
appropriate security for sensitive information from consumers and 
employees. In particular, CVS failed to: (1) implement policies and 
procedures to dispose securely of such information, including, but not 
limited to, policies and procedures to render the information 
unreadable in the course of disposal; (2) adequately train employees to 
dispose securely of such information; (3) use reasonable measures to 
assess compliance with its established policies and procedures for the 
disposal of such information; or (4) employ a reasonable process for 
discovering and remedying risks to such information.
    The complaint alleges that as a result of these failures, CVS 
pharmacies discarded materials containing sensitive information in 
clear readable text (such as prescriptions, prescription bottles, 
pharmacy labels, computer printouts, prescription purchase refunds, 
credit card receipts, and employee records) in unsecured, publicly-
accessible trash dumpsters on numerous occasions. For example, in July 
2006 and continuing into 2007, television stations and other media 
outlets reported finding such information about customers and employees 
in unsecured dumpsters used by CVS pharmacies in at least 15 cities 
throughout the United States. When discarded in publicly-accessible 
dumpsters, such information can be obtained by individuals for purposes 
of identity theft or the theft of prescription medicines.
    The proposed order applies to sensitive information about consumers 
and employees obtained by CVS. It contains provisions designed to 
prevent CVS from engaging in the future in practices similar to those 
alleged in the complaint.
    Part I of the proposed order prohibits misrepresentations about the 
security, confidentiality, and integrity of sensitive information. Part 
II of the order requires CVS to establish and maintain a comprehensive 
information security program that is reasonably designed to protect the 
security, confidentiality, and integrity of such information (whether 
in paper or electronic format) about consumers, employees, and those 
seeking to become employees. The order covers health and other 
sensitive information obtained by all CVS entities, including, but not 
limited to, retail pharmacies and the pharmacy benefit management 
business. The security program must contain administrative, technical, 
and physical safeguards appropriate to CVS's size and complexity, the 
nature and scope of its activities, and the sensitivity of the 
information collected from or about consumers and employees. 
Specifically, the order requires CVS to:
    [bul] Designate an employee or employees to coordinate and be 
accountable for the information security program.
    [bul] Identify material internal and external risks to the 
security, confidentiality, and integrity of customer information that 
could result in the unauthorized disclosure, misuse, loss, alteration, 
destruction, or other compromise of such information, and assess the 
sufficiency of any safeguards in place to control these risks.
    [bul] Design and implement reasonable safeguards to control the 
risks identified through risk assessment, and regularly test or monitor 
the effectiveness of the safeguards' key controls, systems, and 
procedures.
    [bul] Develop and use reasonable steps to select and retain service 
providers capable of appropriately safeguarding personal information 
they receive from CVS, and require service providers by contract to 
implement and maintain appropriate safeguards.
    [bul] Evaluate and adjust its information security programs in 
light of the results of testing and monitoring, any material changes to 
operations or business arrangements, or any other circumstances that it 
knows or has reason to know may have material impact on its information 
security program.
    Part III of the proposed order requires CVS to obtain within one 
year, and on a biennial basis thereafter for a period of twenty (20) 
years, an assessment and report from a qualified, objective, 
independent third-party professional, certifying, among other things, 
that: (1) it has in place a security program that provides protections 
that meet or exceed the protections required by Part II of the proposed 
order; and (2) its security program is operating with sufficient 
effectiveness to provide reasonable assurance that the security, 
confidentiality, and integrity of sensitive consumer and employee 
information has been protected.
    Parts IV through VIII of the proposed order are reporting and 
compliance provisions. Part IV requires CVS to retain documents 
relating to its compliance with the order. For most records, the order 
requires that the documents be retained for a five-year period. For the 
third-party assessments and supporting documents, CVS must retain the 
documents for a period of three years after the date that each 
assessment is prepared. Part V requires dissemination of the order now 
and in the future to persons with responsibilities relating to the 
subject matter of the order. Part VI ensures notification to the FTC of 
changes in corporate status. Part VII mandates that CVS submit a 
compliance report to the FTC within 90 days, and periodically 
thereafter as requested. Part VIII is a provision ``sunsetting'' the 
order after twenty (20) years, with certain exceptions.
    The Commission conducted its investigation jointly with the Office 
for Civil Rights in the Department of Health and Human Services (``OCR-
HHS''). Working together, the Commission and OCR-HHS each entered into 
separate but coordinated agreements with CVS to resolve all the issues 
of both agencies.
    This is the Commission's twenty-fourth case to challenge the 
failure by a company to implement reasonable information security 
practices, and the first case: (1) involving a health provider, (2) 
proceeding jointly with OCR-HHS, and (3) challenging the security of 
employee data.
    The purpose of this analysis is to facilitate public comment on the 
proposed order. It is not intended to constitute an official 
interpretation of the proposed order or to modify its terms in any way.
    By direction of the Commission.

Donald S. Clark,
Secretary.
[FR Doc. E9-6484 Filed 3-24-09: 8:45 am]
[BILLING CODE 6750-01-S]