CVS Plans Merger with Drug-Plan Manager

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And one of the nation's biggest drugstore chains is merging with a big manager of drug benefit plans. The combined company would control more than a billion prescriptions every year. NPR's Scott Horsley reports.

SCOTT HORSLEY: CVS operates more than 6,000 drugstores around the country. Caremark RX sells drugs by mail and manages drug benefits for health plans. CVS Chairman Tom Ryan says putting the two together will save money for employers and others who sponsor health plans, while allowing consumers to get their drugs where and how they want.

Mr. TOM RYAN (Chairman, CVS): Combining Caremark's expertise in serving employers, with our expertise in serving consumers, will help employers and health plans better manage costs and the complexities of the U.S. healthcare system.

HORSLEY: The companies expect to save hundreds of millions of dollars for shareholders by streamlining operations and buying in bulk. But at least one observer is skeptical that consumers will share in those savings. Harvard Health Economist Meredith Rosenthal says Caremark already negotiates discounts on brand name drugs and merging with CVS may not give the firm any more leverage.

At the same time she warns Caremark may put less pressure on CVS to pass along the discounts it negotiates on generic drugs.

Ms. MEREDITH ROSENTHAL (Health Economist, Harvard): Consumers might be hurt because it's all one company.

HORSLEY: The combined company will still have to compete with Wal-Mart's newly discounted generics. Both CVS and Caremark say that played no role in their merger.

Scott Horsley, NPR News.

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