June 15, 2010 / 7:26 PM / 10 years ago

Exec says Medco helped by Walgreen-CVS dispute

* Exec says helped in 2011 selling season

* Cites concerns about instability

NEW YORK, June 15 (Reuters) - Medco Health Solutions Inc MHS.N has seen a benefit to its selling season for next year from a fight between rival pharmacy benefit manager CVS Caremark Corp (CVS.N) and drug store chain Walgreen Co WAG.N, a Medco executive said on Tuesday.

Walgreen said last week it would phase out its arrangement to fill prescriptions for millions of CVS Caremark drug plan members, citing CVS’s efforts to divert customers and inadequate reimbursement rates. CVS retaliated by saying it would dump Walgreen from its network within a month. [ID:nN09141210]

Analysts have speculated that rivals Medco and Express Scripts Inc ESRX.O could benefit if potential clients were turned off from CVS because of the clash. While CVS also operates a large retail drug store chain, Medco and Express Scripts are “independent” PBMs.

At a Goldman Sachs investor conference on Tuesday, Medco’s group president for key accounts, Glenn Taylor, was asked whether the dispute has helped Medco in the 2011 selling season.

“I think it has, only from the sense ... that members, plans like stability and they don’t like instability,” Taylor said during the conference in Los Angeles, which was broadcast over the Internet.

“When they think that their members could be disrupted, then they look for solutions to not have that service component disrupted,” Taylor said. “As long as they can provide it at a fair price, I think that will help the independent PBMs.”

Medco Chief Financial Officer Rich Rubino, speaking at the same conference, said most of the company’s client contracts require a broad retail network. Medco’s ability to provide a network that includes CVS and Walgreen is a “competitive advantage, considering the current situation,” Rubino said.

Analysts believe the two sides must work out an agreement quickly, or see a relationships worth billions of dollars end for good. [ID:nN14211902]

“I would assume that they’re going to find a resolution at some point,” Taylor said. (Reporting by Lewis Krauskopf, editing by Gerald E. McCormick)

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