Merck-Medco/CVS.com Deal Includes Specialty Drugs Mail-Order Agreement
Executive Summary
CVS' ProCare subsidiary will become Merck-Medco's exclusive provider of specialty pharmaceutical mail-order services through an agreement that also gives Merck's pharmacy benefit management subsidiary up to a 10% stake in ProCare.
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CVS' ProCare subsidiary will become Merck-Medco's exclusive provider of specialty pharmaceutical mail-order services through an agreement that also gives Merck's pharmacy benefit management subsidiary up to a 10% stake in ProCare. CVS and Merck-Medco will jointly market ProCare's products and services to Merck-Medco's clients, the companies said. While the PBM will offer all of its clients the opportunity to have specialty pharmaceuticals mailed through ProCare rather than Merck-Medco, the client will have the option to choose either provider. ProCare offers products such as self-administered injectables, growth hormones, infertility drugs and therapies for HIV/AIDS, hepatitis and multiple sclerosis. Specialty pharmaceuticals account for approximately 5% of Merck-Medco's mail-order dollar volume, the company said. The company does not disclose its total mail-order dollar volume. The agreement also includes a "pay for performance" component for CVS' retail pharmacies. CVS will receive additional compensation for meeting Merck-Medco's clients' objectives for generic substitution, formulary compliance and drug utilization review protocol adherence. The companies will also integrate their Internet efforts. CVS.com will be the first online pharmacy to accept Rx orders from Merck-Medco members for delivery by Merck-Medco mail-service or for pick-up at a CVS store. Merck-Medco health plan members may order 30- or 90-day scripts for mail-order delivery at CVS.com. The mail-order scripts will be transferred to one of Merck-Medco's 13 mail-service pharmacies for fulfillment. CVS will receive compensation for the mail-order scripts ordered on its website. Merck-Medco said the online prescription agreement with CVS is not exclusive and that it will allow other online pharmacies into its provider network. A drugstore.com exec recently said Merck-Medco has expressed interest in working with his company (1 (Also see "PBMs Becoming More Open To Online Pharmacy Participation, Execs Say" - Pink Sheet, 4 Oct, 1999.)). CVS.com will be the exclusive online provider of OTC and general health products for the Merck-Medco website. |