Splitting Up CVS Caremark – Stupid – Just Learn How To Compete

The fact that the NCPA [see their press release on this] and others in the pharmacy community have chosen to push for the FTC to investigate the CVS Caremark merger and continue to encourage this is ridiculous.  CVS has owned a PBM (Pharmacare) for years.  Walgreens has its own PBMLongs had a PBM (RxAmerica).  Kroger’s has a PBM.  Unless I’ve missed it, I don’t remember hearing about them not being able to own a PBM or seen complaints about their ownership.  [And, like Adam Fein – I didn’t know this retrospective breakup was even an option.]

So, I perceive this whole FTC issue as a backhanded strategy to gain a competitive advantage over a competitor that’s beating them in the market.  [Just imagine the distraction of having to split the companies up or the hassle of having to put in a bunch of additional limitations.]  We know that independent pharmacies have continued to lose marketshare for years to retail chains and mail order.  It’s no different than any other market where scale matters (e.g., hardware stores).  If small pharmacies can compete, they should figure out how to make money and demonstrate value that people will pay for and stop focusing on crying wolf about a successful competitor.  [More on what I would do another time.]

I’ve been a big believer of retail and PBM integration for years.  At Express Scripts, we only thought there were a few companies that could buy us – Walgreens, Wal-Mart, or United.  At this point, I don’t see that happening, but I see lots of efficiency in leveraging plan design, retail face-to-face counseling, pharmacy automation at mail, and other coordinated solutions.

Another issue that is raised [in complaining about the CVS Caremark integration] are patient complaints.  These are certainly possible, but isn’t that a BBB issue or someone else’s issue.  Unfortunately, I bet you can’t find a pharmacy or a PBM without some patient complaints.  People take their healthcare personally and hate change.  BUT, I can’t imagine that I would go to the government and point out that some clients of my competitor aren’t happy.  [And the fact that politicians believe the hype and try to push stupid legislation like HR 4489 makes a mockery of our government.]  I’ve talked about transparency before so I won’t harp on this here, but how many companies (in our capitalist society) are required to provide data about margins and forced into a certain business model. 

Another issue you hear is about CVS Caremark “steering” people to preferred pharmacies (CVS, mail, specialty).  First off, this is not a PBM decision.  Limited retail networks have been an option for ever.  Clients chose what plan designs to implement.  The PBM’s job is to implement these plans and manage them effectively.  PBMs and consultants (e.g., Hewitt, Mercer) often model out the options for the clients so they learn how to save money.  And, in many cases given the pace of cost increases, if these options didn’t exist, then employers would drop benefits quicker.

Finally, the data doesn’t lie.  Members are generally very happy with the PBMs and mail order (or as much as they are with any “managed care” type company).  PBMs save clients money (and make money doing it).  PBMs provide clients with data.  Clients have lots of options for “transparent” companies and there’s been no big movement of marketshare to them.  PBMs drive adherence.  Mail order patients are more adherent.  Specialty mail order pharmacies drive successful outcomes.  The point is that the model works…stop trying to fight the model and come up with a better mousetrap. 

[Enough ranting for the evening.]

5 Responses to “Splitting Up CVS Caremark – Stupid – Just Learn How To Compete”

  1. CVS-Caremark is not just a PBM/Pharmacy like you stated about Walgreens and the others you compared them to. They also rebottle their drugs, they own the mailorder pharmacy, and they have been caught violating HIPAA laws by using their PBM to get into other pharmacies customer information. They are the biggest scam going today. If allowed they will break the small pharmacy. And that is their motivation.

  2. “PBMs drive adherence. Mail order patients are more adherent. Specialty mail order pharmacies drive successful outcomes.”

    My experience with mandatory mail order specialty pharmacy is the complete opposite resulting in less adherence, increased cost, and unsuccessful outcomes.

    “People take their healthcare personally and hate change.”

    Yes we do take our healthcare seriously so please don’t brush off my concerns to hating change.

    “I try to present a healthcare corporate view from a patient’s perspective.”


  3. Transparency in a PBM? HA HA! Why doesn’t Express Scripts be transparent about what they reimburse to pharmacies and what they “save” to the payors? Why don’t they disclose how much kickback , er…”rebate” they get and how much of this passed back to the payor? PBMs make money , because they are NOT transparent. They are not competitors , they are monopolistic.

  4. George,

    Godo post — and thanks for the shout outs.

    Like me, you apparently assume that logic and facts will win in the end. Based on my experience, that’s not quite how things work.



  1. New CVS Caremark Offering – Specialty Connect | Enabling Healthy Decisions - May 31, 2014

    […] wonder why they ever wanted to break the company up into different business units.  As I’ve said for years on the blog, in the press, and to many Wall Street analysts, the integration of the business units can offer […]

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