A barrier has been breached with
WHAT CVS SAYS
OK, let’s assume that he includes all types of retail pharmacy within the definition of “competitor.” So we can conclude that the generic programs of Wal-Mart (WMT), Walgreens (WAG), Kroger (KR), et al are apparently not having a material effect on
Why give up the generic margin? Mr. Ryan offered the following explanation, which I have parsed into two separate components:
- “We’re in the middle of an understated [sic] difficult economic crisis to say the least. People are struggling with healthcare costs more than ever before especially the under and un-insured. We felt it was the right time to offer a differentiated affordable option.”
- “Given the enrollment fee and the fact that we expect some share gain and increased foot traffic we think the RX
shouldn’t cost us more than $0.01 or so per share on an annual basis.” Health Savings Pass
Sorry, but I don’t follow the logic about market share gains with the uninsured and under-insured in the first statement. Third-party payers represented 95.3% of
The second statement is more telling. Sure, the enrollment fee will help maintain loyalty as consumers try to amortize the fixed annual cost over their scripts. The $10 per customer will also provide some (non-reimbursement related) cash flow to cushion their loss of generic margin.
CVS VS. CVS
Frankly, I’m puzzled by the fit between the new generic program and the legacy Caremark mail order business. Mail order becomes less attractive if a 90-day mail script is the same (or more than!) three 30-day retail scripts. Perhaps
I’m curious to hear from Drug Channels readers. What’s happens next in the retail pharmacy industry?