West Virginia's attorney general sues pharmacies

The West Virginia Attorney General's Office has filed a lawsuit in the state’s Boone Circuit Court alleging that CVS Pharmacy, Kmart, Kroger, Walgreen Pharmacy, and Target violated a state law designed to promote use of generic equivalents for brand-name prescription drugs, according to media reports in the state.

Under the law (30-5-12B), all savings from the substitution of the less expensive generic drug must be passed on to the consumer.

Fran Hughes, managing deputy attorney general, told the West Virginia Gazette that the lawsuit contends that the pharmacies in question have routinely failed to comply with the state law and have pocketed the savings instead of returning them to the consumers.

Evidence cited in the lawsuit includes a CVS annual report to stockholders in 2007, which credited an increase in gross profit margins to the increased use of generic drugs.

"Our gross profit and gross profit margins generally increase with the corresponding increase in generic dispensing rates, since generic drug revenues normally yield a higher gross profit rate than equivalent brand-name drug revenues," the report stated.

CVS Pharmacy, Kmart, Kroger, Walgreen Pharmacy, and Target could not be immediately reached for comment.