CVS Caremark loses some Chrysler business to Medco
Thu Jul 30, 2009 3:29pm EDT
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Chrysler union retirees move to Medco under VEBA plan
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CVS keeps other Chrysler retirees, employees
CHICAGO, July 30 - CVS Caremark Corp will no longer manage pharmacy benefits for Chrysler's union retirees starting next year, now that rival Medco Health Solutions Inc won that business.
Medco said on Wednesday that it gets the Chrysler's union retirees' business since they fall under the newly created United Auto Workers retiree medical benefits trust, known as the VEBA trust.
Medco already does business with Ford Motor Co (F.N: Quote, Profile, Research, Stock Buzz) and General Motors Co [GM.UL] retirees, who also move into the UAW trust.
"The unions decided to bring the automakers under one VEBA contract. We had the smallest portion, so we lost the Chrysler union retirees," a CVS spokeswoman said on Thursday.
Pharmacy benefit managers, or PBMs, administer prescription drug benefits for employers and health plans and operate large mail-order pharmacies. CVS also operates its namesake drugstores.
CVS will still do business with Chrysler's active employees and their nonunion retirees.
The financial impact of the move should be minimal, said Lazard Capital Markets analyst Tom Gallucci, who has a "buy" rating on CVS shares.
The spokeswoman said CVS would give an update on its earnings call on Aug. 4.
CVS won the Chrysler business from Medco in 2006 in a competitive bid and it "was logical" that Chrysler's business would now move over to Medco since it already works with Ford and GM, Gallucci said.
LINK:
CVS Caremark loses some Chrysler business to Medco | Industries | Healthcare | Reuters
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