| April 30
April 30 CVS Caremark Corp is set to
provide pharmacy benefit and other services for 1.1 million
CareFirst BlueCross BlueShield members starting next year, a
deal that could represent about $1 billion in annual spending on
medications and boost CVS' profit by a penny per share, an
industry analyst said.
The three-year contract is the latest win for CVS Caremark,
which has been gaining ground with its combined approach of
running retail drugstores and a pharmacy benefits management
This year stands to be a busy one for the healthcare sector
as the United States prepares for 30 million people to join the
ranks of insured patients under the Affordable Care Act, or
"Obamacare," starting in 2014.
CareFirst announced the contract, which begins on Jan. 1,
2014, in a statement issued on Monday. It said the contract
covers its commercial and Medicare Part D members.
The deal could add about 1 penny per share to CVS Caremark's
earnings in 2014, JP Morgan analyst Lisa Gill said on Tuesday.
CareFirst said that it expects to see substantial savings in
prescription drug costs, and would reflect those savings in its
"As federal health reform begins to fully take effect, we
are heading into a challenging environment in which meeting our
members pharmacy needs - and doing so cost efficiently - is more
important than ever," CareFirst President and Chief Executive
Chet Burrell said.
Pharmacy benefits managers, or PBMs, such as CVS Caremark
administer drug benefits for employers and health plans and run
mail order pharmacies. CVS also operates its namesake stores.
Gill said that CVS displaced Argus with the contract win.
DST Systems Inc, which owns Argus Health Systems,
could not be reached immediately for comment on Tuesday.
CareFirst, an independent licensee of Blue Cross and Blue
Shield, offers services in Maryland, Washington, D.C., and
Northern Virginia. The not-for-profit says that it is the
largest health care insurer in the Mid-Atlantic region and its
members include more than 577,000 members in the Federal
Employees Health Program.
CareFirst's deal with CVS Caremark "may indicate that large
health plans are more comfortable with the capabilities and
product suite of the larger PBMs as a means to drive
prescription drug savings," Gill wrote in a note to clients.
CVS Caremark was not immediately available to comment. The
company is set to report its quarterly results on Wednesday.