Aetna, CVS Partnering On Pharmacy Benefit Program

By Marley Seaman

NEW YORK CITY (AP) — CVS Caremark Corp July 28 reported weaker quarterly earnings and lowered its profit forecast, but shares rose as investors approved of a large pharmacy benefit management services contract struck with Connecticut-based Aetna.

CVS Caremark will administer Aetna’s retail pharmacy store network and manage customer service. It will also handle prescription drug purchasing, manage inventories, and fill prescriptions for Aetna’s mail order and specialty pharmacy operations.

The contract will ramp up over several years and bring in revenue of $8.2 billion next year. CEO Tom Ryan said the 12-year contract is the largest and longest contract in the industry.

The contract offsets other major contracts lost in the past year. That lost business pushed second-quarter net income down 7 percent to $821 million from $886 million.

The companies said Caremark will serve about 9.7 million Aetna PBM members and administer $9.5 billion in drug spending per year.

Pharmacy benefits managers handle drug benefits for health plan members and sponsors. They buy large amounts of drugs to fill prescriptions, which is one way they can save money for clients.

Aetna said one reason it chose Caremark was its ability to negotiate lower drugs prices. Caremark is one of the largest pharmacy benefits managers in the United States.

PBMs also try to make sure plan members continue taking their medications to avoid more expensive complications. They also work to keep prescription costs down by filling orders by mail with cheaper generic drugs.

Aetna will still own its pharmacy benefits management business, but it will transfer 800 employees to Caremark. Another 1,000 employees will remain with Aetna.