Summary
CVS Caremark’s PBM businesses are not becoming a larger share of prescriptions filled at CVS retail pharmacies. Put another way, the flagship Maintenance Choice program may be appealing to payers and consumers, but there is not yet a quantitatively visible shift in CVS' retail activity. If CVS pharmacies are taking retail pharmacy market share, then it’s not yet as a result of corporate co-ownership with a PBM.
Analysis
CVS Caremark posted impressive financials in its 2008:Q4 earnings last Thursday. Same store sales at CVS retail pharmacies increased 4.5% in 2008 (4.8% in pharmacy and 3.6% in the front-end). The Longs deal gave an extra boost to fourth quarter revenue.
I suspect that CVS Caremark will try to take a stronger hand to generate greater “synergies” for its combination business model. CEO Tom Ryan alluded to "people experimenting with limited networks" on Thursday's earnings call. Wal-Mart (WMT) has already thrown down the gauntlet for the preferred pharmacy network in its deal with Caterpillar (CAT). However, we still have little evidence that consumers or payers will accept limited networks on a wide-scale.
See this post on my Drug Channels blog for my detailed calculations of how much of CVS' retail prescription revenues come from CVS Caremark’s 3 PBM businesses.
