Magazine article Drug Topics

CVS' Caremark Buy Seen as Bold, Positive Move

Magazine article Drug Topics

CVS' Caremark Buy Seen as Bold, Positive Move

Article excerpt

The recent news that CVS and pharmacy benefit manager Caremark Rx are hooking up (Drug Topics, Nov. 20) didn't come as a surprise to pharmacy insiders. What does the industry think of the $21 billion agreement?

Perry Cohen, Pharm.D., principal of the Pharmacy Group LLC, Glastonbury, Conn., said the merger "shows a wave of consolidation in the PBM industry as a repercussion of the winners and losers in Medicare Part D. Some people thought that the only losers were going to be small independent pharmacies. Some PBMs will be losers, too." If s easier to pick up script volume by directing PBM claims than to go and build more pharmacies, he said. "It all ties together. Then you have WalMart offering $4 generics. A lot of the big players are doing things to protect their franchise or guarantee revenue streams in this new world."

Pointing out that the merger will enable CVS to pick up additional capabilities for its PBM subsidiary PharmaCare, Cohen said, "CVS also has a specialty pharmacy and mailorder service. With the addition of Caremark, CVS will see increased claims and drug volume."

Joseph Agnese, senior industry analyst at Standard & Poor's Equity in New York City, said, "Caremark is a large PBM, so the size is a little bit surprising. If mis happened some years ago, before drugstores started building their PBMs, it would have been more of a surprise."

Agnese agreed with Cohen that the CVS-Caremark deal is logical. "It fits CVS' strategy well," he said. "The chain was looking to grow its PBM business and this merger does just that in a significant way. It definitely gives CVS the scale and boosts its capability to offer mail order."

How will the deal impact independents? Agnese speculated, "Having more and more share in fewer and fewer hands hurts individual pharmacists because it makes it more difficult for them to compete."

The National Community Pharmacists Association issued a statement that said the merger plans could have a significant negative impact on patients' access to the pharmacy of their choice. However, NCPA also called the planned merger an excellent opportunity for CVS to address the many problems that PBMs like Caremark have caused community pharmacies and their patients, and urged the company to take action to clean up PBM abuses. …

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