What should CVS do?

Since: Mar 12

Location hidden

#1 Apr 5, 2012
- Use the opportunity to withdraw from CVS's existing Medco/ESI contracts(since the merger is done and it is a new entity, I think parties may have the ability to withdraw from contract at least the medco contract). Why should CVS help their main PBM competitor that has doubled in size? I think CVS was competing more with Medco than ESI. So getting Medco customers out of ESI is essential for CVS/Caremark growth.

That action alone should sent the medco/ESI customers rushing to Caremark as the choice PBM in the PBM selling season, since ESI lacks 40% of retail exposure at that point(no wag or cvs in the network). No customer would want to go with ESI and existing Medco customers will leave the new ESI in droves, leaving the merger astray. Caremark PBM business should go through the roof (and other smaller PBM competitors also will benefit)

- Extend an offer to buy/merge with Walgreens (and may be keep the walgreens brand name). I don't think FTC can block that merger since they already allowed Medco/ESI merger (which currently covers 50% of insured lives in US). They can argue that to counter/compete with the new mega PBM, they need similar scale.

- Compete aggressively to get Rite-Aid out of the market.

It will be a company with $200 billion+ revenue within a year. ESI's anticipated $100 billion revenue could go down drastically.

What do you think?

Las Vegas, NV

#2 Apr 5, 2012
I think that 1 major drug retailer controlling 90% of all rx filled in us is worse that 1 pbm controlling 50% of all rx

Since: Mar 12

Location hidden

#3 Apr 6, 2012
Wag, the largest retail pharmacy, yet WAG fills only 20% of the prescriptions in US, CVS fills even lower.

So the combined retail market share of CVS+WAG won't exceed 40%. If ESI/Medco that covers 50% of the lives can go through, there is no way FTC can block this merger. Actually FTC decision will be forcing these type of mergers.

PBM influence is bad in a different way because for the most part, the consumers of the healthcare have no choice in picking the PBM. So PBM has no real accountability and they obfuscate pricing.

The republican congressman Billy Tauzin who authored Medicare prescription law went on to work for big pharma, because he gave the drug manufacturers such a good deal. I wouldn't be surprised if any of the FTC commissioners who approved the ESI/Medco deal ends up working for them.

PBM is an unnecessary middleman industry adding to the cost. If you eliminate that, rx costs will come down. They are trying to justify their existence through various shenanigans.

Since: Mar 12

Location hidden

#4 Apr 6, 2012
It looks like 2 out of the 4 FTC commissioners were Bush appointees and 2 were Obama appointees. One of the obama appointees dissented with the merger decision.

After denied access to Walgreens, how many ESI plan employees are going to go to their HR dept to find out how competitive the new PBM contract from ESI is compared to other PBMs?

It is hightime the employees start owning their healthplan from employers. What makes anyone think that employers will do a better job at managing this? Who has your best interest in mind - you or your employer?

I think it is time for this country to move away from employer sponsored health insurance (especially once you remove restrictions around preexisting conditions). Let people make their choices on which insurance/PBM they want to use and whether a PBM is really providing them any value.

The benefit is that then PBMs/manufacturers will be forced to go to transparent pricing instead of shell games like rebates. Think about it - mail in rebate concept is history in consumer electronics today.

With so many drugs becoming generic, is there any need for a PBM? Shouldn't paying cash prices ensure better competition and lower prices?

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