CVS Caremark lands PBM contract with FEP

WOONSOCKET, R.I. — In a major win for its pharmacy benefit management business, CVS Caremark will handle the $3 billion mail-order and specialty prescription drug benefit for the Federal Employee Program starting January 2012, which, for the last three years, had been handled by rival Medco Health Solutions.

"We are very gratified that FEP has recognized that CVS Caremark's unique integrated model for pharmacy care provides the best overall value and offers their plan members innovative, cost-effective pharmacy benefit management services that improve health outcomes," said Larry Merlo, CVS Caremark president and CEO, in a company statement announcing the news.

CVS Caremark will continue to provide FEP's clinical programs and retail PBM services, and also will provide mail-order pharmacy services and specialty pharmacy services to FEP's more than 5 million federal employees, retirees and dependents.

CVS Caremark has been administering FEP's retail PBM program since 1993 and the contract most recently had been extended through the end of 2011. The new agreement, which runs through 2014, brings the relationship between CVS Caremark and FEP to more than 20 years.

"FEP is a highly valued client and we are committed to continuing to deliver the same high level of service and patient satisfaction that we have provided to FEP's federal employees, retirees and their families for many years," stated Per Lofberg, president of CVS Caremark's PBM business.

Many industry observers viewed the news as a major win for CVS Caremark and following the announcement, Citi Investment Research analyst Deborah Weinswig kept a "Buy" rating on the stock and boosted her target to $46 per share from $41.