Icky
11-02-2006, 05:10 PM
CVS in Talks to Acquire Nation’s Largest PBM CVS, the second-biggest drugstore chain in the country, is in advanced talks to acquire Caremark Rx, the leading pharmacy benefits manager, for more than $21 billion, people close to the negotiations said yesterday. The negotiations were at a critical stage yesterday, people close to the talks said, and could still break down. Exact terms of the deal could not be learned. The transaction would transform CVS from being primarily a retailer to becoming the nation’s preeminent manager of pharmacy benefits. The merger talks illustrate the attraction that pharmacy benefits managers despite the challenges to the business that have emerged in recent weeks. The Wal-Mart $4 generic drugs program has been seen as one of those challenges. For CVS, based in Woonsocket, R.I., the transaction would be by far its largest yet; Caremark, based in Nashville, has a market value of $21 billion while CVS has a market value of nearly $26 billion. In recent years, CVS has already been growing its own pharmacy benefits management business, PharmaCare, which has become an increasingly important driver of profits. An acquisition of Caremark would put CVS, which as a drugstore chain is No. 2 to Walgreen, far ahead of rivals Medco Health Solutions, Express Scripts and Wellpoint in the pharmacy management business. The nation’s pharmacy benefits managers handle about 75 percent of the $235 billion spent on prescriptions every year. Caremark ’s distribution network includes 60,000 pharmacies around the country and seven mail-order pharmacies. Last year, it processed more than 530 million prescriptions. Caremark currently has the contract to handle pharmacy benefits services for 4.5 million federal employees, retirees, and dependents.