CVS Health Corp

Arch-rival Walgreens Boots Alliance Inc (NASDAQ:WBA) and drug maker Valeant Pharmaceuticals Intl Inc (NYSE:VRX) have reached an agreement that will manage the new drug pricing and distribution. At 10% discount, the two agreed that Walgreens will sell Valeant’s signature skin and eye drugs. At the same time, Walgreens must not sell the low generic-drug expensively.

But the fact that the deal does not allow Walgreen to take possession of the Valeant drugs is likely to affect pharmacy benefits managers the likes of CVS’ Caremark unit.

However, from the look of things, CVS Health’s CEO Larry Merlo has not embraced this move. Merlo feels that Valeant is making an attempt to evade what PBMs do for payers, the management of pharmacy benefits of the employer. PBM also tries to get the best of prices with pharmaceutical companies and drugstores.

And even though there was no one from either of the Companies to comment, it is expected that enterprise will post a $600 million into the healthcare system as yearly investments. From this, it is easy to figure out why Merlo has a problem with anything that endeavours to ruin the PBM industry.

CVS forecast Caremark is anticipating a rise in revenue come 2016 to a $121 billion mark. This will be more than double what was achieved in 2011, and it is enough indication that the Company is growing faster than CVS/pharmacy that is the Retail Division of the Company.

On the other hand, Merlo has also pointed out the exclusion of government insurance programs on the Valeant/Walgreens pact. Besides the big question is; why is the employer too agreeable to paying higher compensations to shield the deficit?

It is not clear how the affiliation between CVS and Valeant will turn out and in case there is nothing much to take home, things may not end up well.

In any case, it is only six weeks ago when CVS excluded one of Valeant’s former allies from Caremark’s network. And at the same time, CVS is also axing out Philidor, a specialty pharmacy under inquiry after evidence revealed that the pharmacy was not complying with the standings of its provider covenan

Sources: fortune