CVS Caremark Inc announced today it will buy the Medicare prescription drug plan business of a unit of Health Net Inc., increasing the size of its business that provides prescription drug coverage under the Medicare Part D program, for $160 million, Phil Wahba reports at insurancetech.com.
Medicare is the U.S. government's healthcare program for the elderly.
CVS is hoping to expand into a growing segment of the pharmacy benefit management market, according to Wahba.
The deal is subject to regulatory approval from the Centers for Medicare and Medicaid Services (CMS). Wahba reports that Health Net, a managed care company, said in a statement on Monday that it expects the deal to close in the second quarter of 2012.
Health Net, a Woodland Hills, Calif.-based., managed care company, has about 400,000 Medicare prescription stand-alone members, according to Wahba, and he writes that the company said that business “generates about $490 million in annualized sales.”
Health Net will continue to provide prescription drug plans as part of its Medicare Advantage offerings, the AP reports. According to the story, CVS Caremark Corp., based in Woonsocket, R.I., is expanding its Medicare Part D business “because as the population ages, more Americans will get their prescription drug coverage from Medicare.”
Health Net had previously faced sanctions from the CMS tied to its Medicare Advantage and prescription-drug plan products for allegedly failing to provide enrollees with prescription drug benefits that conformed with laws, guidelines and contract terms, but the company was able to begin selling the plans again in August.
This deal could be a huge boon to CVS. According to the Wall Street Journal, the deal comes as the drug-store chain “has posted steady growth and last month predicted profit this year would notch a double-digit increase based on the midpoint of the drugstore chain's 2011 outlook.”
Last year, CVS bought Universal American's Medicare prescription business for about $1.25 billion, according to Wahba.
Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO East 2012, taking place Jan. 31-Feb. 3 2012, in Miami, FL. ITEXPO offers an educational program to help corporate decision makers select the right IP-based voice, video, fax and unified communications solutions to improve their operations. It's also where service providers learn how to profitably roll out the services their subscribers are clamoring for – and where resellers can learn about new growth opportunities. For more information on registering for ITEXPO registration click here.
Stay in touch with everything happening at ITEXPO. Follow us on Twitter.
Deborah DiSesa Hirsch is an award-winning health and technology writer who has worked for newspapers, magazines and IBM in her 20-year career. To read more of her articles, please visit her columnist page.Edited by
Rich Steeves
