Vol. 30 No. 7
The Business of Retail Pharmacy
A Lebhar-Friedman® Publication June 23, 2008
Election may be good for pharmacy, but cha nges likely slow, experts predict BYJIMFREDERICK health policy analyst at Citi Investment Research. WASHINGTON — Addressing reporters and Whether Amer- investors on the likely impact ican voters hand of the election on retail phar-Barack Obama or macies, pharmacy benefit John McCain the managers and drug compa-keys to the White nies, Heldman predicted that House next fall, the neither election-year politics election of a new presi- nor pressure from voters, dent may herald better times politicians and advoca-both for retail pharmacy and cy groups is likely to the generic drug industry, spur a sweeping financial and health policy overhaul of the U.S. experts predicted late last healthcare system in month. But even a new presi- 2009. Nor is that pres-dent and a possible shakeup in Changes are likely to be elevation of sure likely to lead to a Congress aren’t likely to “slow and incremental” health care as a dramatic lowering of spawn rapid or wholesale rather than dramatic and hot election-year health care or drug costs, or changes to the U.S. healthcare sweeping, despite the current issue, said Paul Held- universal health coverage, in system, they noted. mood of U.S. voters and the man, a director and senior CONTINUED ON PAGE 174
Inside this issue
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CHAIN PHARMACY Indies harness strengths in push for legislation
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CVS Caremark locks up GE contract for ’09 WOONSOCKET, R.I. — It appears CVS Caremark’s already won the PBM contracts to service the “power of one” pharmacy benefit model con- Employee Retirement System of Texas and tinues to gain favor among big healthcare the BellSouth portion of the AT&T contract. payers—not to mention share in the PBM The Employee Retirement System of Texas market. Early this month, Drug Store News and the consolidated AT&T contracts com-learned that the company had scored another bined are worth nearly $1 billion in annual big win for its PBM business, wrestling the revenues, Weinswig noted. Including other GE prescription drug benefit plan account smaller contracts, new contract wins to date away from Medco Health Solutions. represent about $3 billion in year one rev-GE confirmed that enues, in addition to administrators in- the potential $1 billion formed company em- from the GE contract. ployees that their Currently, Medco pharmacy benefit plan Health Solutions ad-would change from ministers benefits for Medco to CVS Care- 310,000 active GE em-mark starting Jan. 1. ployees and depend-Roughly a year ago, ents, plus 235,000 re-when CVS merged tirees and dependents. with Caremark Rx, CVS Caremark continues to grow as a PBM powerhouse with the acquisition of the GE prescription drug benefit plan account. CIR’s managed care creating a PBM power- analyst, Charles Boor-house, Tom Ryan, chairman, president and ady, estimated revenues of $1,500 per person chief executive officer, described the move as per year from actives and $2,500 per person “game-changing” with the vertical integra- per year from retirees, yielding $1 billion to tion marking a new paradigm for retail phar- $1.1 billion in annual revenue potential. macy. That’s exactly how it is playing out. While, it is unclear whether CVS Caremark “We believe this demonstrates CVS’ strength secured the contract on price or total service in its broad healthcare offerings and expansive offerings, it still marks a major win. network that no other PBM or drug retailer can “Even if Caremark did win the GE contract replicate, and will allow CVS to continue to by virtue of an aggressive bid, it is still an gain market share,” said Citi Investment important victory,” said Goldman Sachs ana-Research analyst Deborah Weinswig. lyst John Heinbockel. “It should further pay-The GE contract marks the third-largest ers’ and investors’ perception of the attractive-PBM contract win for CVS Caremark. It has ness of the CVS Caremark business model.”
OTCS
‘Clif’ hanger: halloween nutrition bars? Pg 71
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BEAUTY CARE
Some gray can stay Pg 113
CONSUMABLES
Omega Farms’
‘Moo’ sports drink?
Pg 155
GENERAL MERCHANDISE
Greeting cards enter the You Tube age
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WASHINGTON — The convenient care clinic industry is applauding the Federal Trade Commission on its recent approval of staff comments regarding the proposed regulation of retail healthcare facilities in Illinois.
The comments were filed by the staff of the Office of Policy Planning and the Bureaus of Economics, Competition and Consumer Protection with state Rep. Elaine Nekritz, D-North-brook, regarding HB 5372 and the proposed regulation of retail health clinics within the state.
“The FTC comments continue its advocacy of an open and competitive healthcare marketplace where retail-based clinics can play an increasingly important role in providing consumers in Illinois and other states with easier access to high-quality, affordable health care,” said The Convenient Care Association in a statement.
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