Projo Biz Blog

CVS Caremark has won a pharmacy benefits contract with the Texas state pension agency worth nearly $500 million annually.

The Employees Retirement System Board of Trustees announced this week it selected Caremark Rx LLC, a unit of CVS, as its new pharmacy benefits provider.

Pharmacy benefit managers enter into contracts with employers and government health plans that offer prescription drug benefits to process claims for medications provided to patients enrolled in the health plans.

PBMs use their buying power to obtain volume discounts and rebates from drug manufacturers and to negotiate discounts with retail pharmacies that dispense the drugs. The PBMs then pass these savings on to clients.

During its four-year contract, the CVS unit will contract with pharmacies throughout Texas to provide prescription drugs and process mail-order medication deliveries to some 450,000 active and retired Texas state employees and their families.

CVS replaces rival Medco Health Solutions Inc.

Brokerage house Wachovia Capital Markets LLC expects the Texas contract will have a slight impact on CVS' earnings, adding 1 to 2 cents per share in annual earnings.

"This contract win is a sign that CVS/Caremark's offerings are compelling to the market," Wachovia analyst Matt Perry said today in a note to investors.

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