WOONSOCKET – CVS Caremark Corp. is cutting prices on prescription drugs in an effort by its pharmacy-benefit management division to win new customers and keep current ones.
The price cuts may reduce the profit margins of CVS and competitor Medco Health Solutions Inc., Bloomberg News reported.
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Helene Wolk, an analyst at Sanford C. Bernstein & Co., said the lower drug prices already have helped CVS win two new contracts for next year, although she added that Medco remains “the gold standard when it comes to service” among PBMs.
Last December, CVS Caremark installed a new executive, Per Lofberg, to run its PBM division after it lost $4.8 billion in contracts for 2010 due to complaints about poor service and other issues.
With $142 billion in branded drugs losing patent protection by 2014, CVS and Medco are seeking to add more customers to their rolls so they can gain from the lower prices and wider margins they get when selling generics, Bloomberg said.
CVS is scheduled to release its first-quarter earnings report on Tuesday.
