CVS's Caremark Deal May Give It Greater Clout With Drugmakers

Pharmacy free-for-all: CVS buys Caremark Rx in $20.8 billion deal It's anything but business as usual at CVS: The nation's largest retail pharmacy said yesterday that it would acquire Caremark Rx, one of the largest pharmacy services providers, in a deal estimated at $20.8 billion.

The news comes amid tough times for retail pharmacies. Many consumers, beset by chronic illness and skyrocketing prescription drug costs, have switched to mail-order prescription plans to save money, cutting into the foot traffic in drug stores.

Earlier this fall, Wal-Mart made waves by trying to entice those customers back with $4 generic drug prescriptions. That set off a price war, with companies like Target and Kroger matching the $4 deal.

Industry observers said that while the retail-drug business has traditionally been at odds with the mail-order business, the combined company may give each entity additional clout -- such as more buying power with generic drugs, as well as beefing up CVS's access to members of Medicare's prescription drug plan.



Caremark provides prescription benefit management services to more than 2,000 health plans, and the company said that combined projected revenues for CVS and Caremark for 2006 are estimated to be approximately $75 billion. The new company, CVS/Caremark Corp., will be based in Woonsocket, RI.

"This merger is a logical evolution for CVS, Caremark and the entire pharmacy industry," the company said in announcing the deal. "Employers and health plans want to control costs, but also want their plan members to have access to a full range of integrated pharmacy services. Consumers of prescription drugs demand convenience and want to get more for their healthcare dollar. Together, CVS and Caremark will help manage the costs and complexities."

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