DATE: Friday, October 10, 1997              TAG: 9710100682

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER 

DATELINE: RICHMOND                          LENGTH:   59 lines

CVS FINES $1.6 MILLION THE DRUGSTORE CHAIN'S FINE IS THE LARGEST EVER IMPOSED BY A VIRGINIA HEALTH REGULATORY BOARD.

Drugstore chain CVS Corp. will pay a $1.6 million fine - the largest fine ever imposed by a Virginia health regulatory board - for its role in Eckerd's bungled takeover of more than 100 Revco stores.

``I would certainly hope that this action . . . would serve as a deterrent,'' said Robert Nebiker, deputy director of the Virginia Department of Health Professions.

In May, Woonsocket, R.I.'s CVS announced that it had sold 113 Virginia Revco drugstores to Eckerd, a chain that was eager to expand in the Mid-Atlantic. The spinoff allowed CVS to satisfy anti-trust concerns and complete its merger with Revco D.S. Inc.

But Eckerd tried to operate the stores without computerized prescription records - a mistake that has haunted the Clearwater, Fla.-based retailer ever since.

Customers quickly realized that the neighborhood drugstore where they had shopped for years knew nothing about them - from their first names to their allergy information.

Others complained about drug shortages, daylong waits for prescription refills and problems using their insurance cards. Harried pharmacists began to make prescription errors.

In August, the Virginia Board of Pharmacy, part of the health professions department, fined Eckerd $100,000 but acknowledged that the situation had improved. State regulators saved their wrath for CVS, believing the nation's No. 2 drugstore chain essentially had the keys to operate the Revco stores but did not hand them over to Eckerd.

After the buyout was announced, CVS took Revco's computers and departed. Pharmacists accustomed to Revco's sophisticated network said they were shocked when they were given four months of store prescription records on microfiche.

Aside from creating chaos in the stores, the action violated a state law that requires the transfer of two years of information. Both companies knew of the records law before they agreed to the decision.

Because CVS failed to provide sufficient records to Eckerd, it effectively ``closed'' the Revco stores without properly notifying customers and state authorities, the board said in its decision.

The board also noted that CVS, as part of its agreement with the Federal Trade Commission, agreed to ``maintain the viability and marketability of all assets to be divested to Eckerd.''

According to the board's findings, the 120 Revco stores that CVS had retained in Virginia were operating smoothly. Meanwhile, Eckerd's new pharmacies were in chaos.

A CVS spokesman could not be reached Thursday.

But during a hearing in September, CVS executives claimed that Eckerd had demanded a speedy buyout, even though CVS was willing to wait until the companies had worked through the records mess.

CVS's president, Thomas Ryan, has signed a consent order agreeing that the chain will pay the fine, which will help fund school construction.

``It's been entered, and the money's due in 20 days,'' said Nebiker. KEYWORDS: CVS FINE PHARMACY

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