CVS Caremark re-ups with Cardinal Health, McKesson

Action follows the AmerisourceBergen/Walgreens realignment

In the aftermath of the pathbreaking supplier contract between Walgreens, the leading chain pharmacy, and AmerisourceBergen announced in mid-March, news about other supplier contracts not moving becomes news itself. Such is the case with CVS Caremark, the largest PBM/retailer, which has announced that it is renewing its supplier contracts with both McKesson and Cardinal Health. Cardinal Health, which lost the Walgreens business to ABC, seems to be highly relieved to be able to reaffirm the CVS Caremark contract, noting that the contract runs through mid-2016 and “the stores and distribution centers serviced under the new arrangement are essentially the same as those serviced in the prior arrangement.” McKesson’s statement said that it was “extremely pleased” to continue the relationship.

Adam Fein, president of Pembroke Consulting (and a Pharmaceutical Commerce Editorial Board member), noted on his Drug Channels blog that CVS Caremark splits its business between CVS retail stores and distribution centers (to Cardinal) and Caremark mail facilities and some small retail business (to McKesson). CVS Caremark is largest single customer of Cardinal and McKesson.

The dance among the Big Three wholesalers and the bigger chain pharmacies or PBMs is growing more nuanced with the passing years, starting, arguably, with the merger of CVS and Caremark in 2007. In the meantime, ABC has expanded its specialty group (and both Cardinal and McKesson have broadened their specialty groups); Walgreens linked up with UK-based Alliance Boots; and Express Scripts bought Medco to become the largest pure PBM. CVS Caremark and Express Scripts, between them, serve more than half of the US pharmacy market.