Magazine article Drug Topics

CVS Caremark and Cardinal Health Team Up to Supply Generic Drugs

Magazine article Drug Topics

CVS Caremark and Cardinal Health Team Up to Supply Generic Drugs

Article excerpt


CVS Caremark and Cardinal Health are about to become the single largest supplier of generic chugs in the United States. The two companies have signed an agreement that commits them to a "50/50 joint venture" that may dominate the U.S. market, which their official press announcement calls the largest market for generic chugs in the worid.

In the United States, CVS is No. 1 in Rx fills; last year, the company said, between mail order and its retail stores, it filled more than a billion prescriptions. Cardinal Health, which specializes in healthcare services, ships chugs and medical products "to more than 100,000 provider and pharmacy locations each day," the statement said.

The new entity is expected to begin sourcing and negotiating generic drug contracts for both companies by July 1, 2014. The initial agreement which builds upon a business relationship already existing between the two companies, extends through the next 10 years. To equalize the partnership, Cardinal Health will make a quarteriy payment of $25 million to CVS Caremark for the duration of the agreement.

Another press statement announced that already existing chug distribution agreements between Cardinal Health and CVS Caremark have been extended for three years, through June 2019.

Competitive advantage

"It should be a win for CVS and Cardinal, since their combined buying power should give them a competitive advantage over other PBMs," said L. William Katz, president, Katz & Associates, Gilbert, Ariz. …

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