CVS, Medco may make less from benefit plan

WASHINGTON – CVS Caremark Corp. and Medco Health Systems Inc. may generate less profit from a shared $10 billion contract for federal-employee drug benefits after a study found the plan costs more than other government prescription programs, Bloomberg News reported.
A House subcommittee was slated to discuss options for revamping the program at a roundtable with insurance and pharmacy representatives in Washington, D.C. late last week. CVS and Medco are the country’s two biggest pharmacy benefit managers.
Rep. Stephen Lynch, D-Mass., called the meeting after the Congressional Budget Office said the CVS and Medco plan, which covers Congress and most other federal employees, pays 15 percent to 45 percent more for prescription drugs than comparable programs at the Defense Department and the Veterans Administration.
An overhaul of the plan may hurt sales and profit at CVS and Medco because the contract is one of the biggest for each company, said Steven Shubitz, a Des Peres, Mo.-based analyst for Edward Jones & Co.
CVS had drug-benefit revenue of $43.8 billion last year through its Caremark business, edging out Franklin Lakes, N.J.-based Medco’s $43.3 billion, according to data compiled by Bloomberg. CVS is also the largest U.S. drug store chain. &#8226