CVS' merger of PBM units: It's about time

WHAT IT MEANS AND WHY IT'S IMPORTANT The news that CVS Caremark is making an investment to integrate its five pharmacy benefit management units isn’t really a big surprise and, in fact, could have some industry observers wondering what took this well-oiled acquisition machine so long.

(THE NEWS: Report: CVS Caremark to merge PBM units. For the full story, click here)

The reality is that the company is applying a discipline it has applied to the retail side of its business to its PBM business. Over the years, CVS’ management has established a proven track record of acquiring stand-alone drug store chains and quickly assimilating the acquired operations into the CVS footprint, including converting store systems. For example, think back to its 2006 acquisition and integration of the roughly 700 standalone Sav-On and Osco drug stores from Albertsons and, prior to that, its acquisition of some 1,260 Eckerd stores.

Now with Per Lofberg in his new role as PBM president, it appears as though CVS Caremark is ready to tackle the PBM units and integrate their cobbled together information systems.

As one can imagine, the financial investment will be significant (a dollar figure hasn’t been disclosed but CVS said it will be “substantial”), but the upside will be improved internal processes, productivity and costs.