By Lauren
Flynn Kelly - June 18, 2015
The big news in the retail pharmacy
space this week was that CVS Health plans to purchase 1,660
Target Corp. pharmacies that it will rent from the big-box retailer and rebrand
as CVS/pharmacy. This may create some confusion and dismay among former
CVS/pharmacy customers who’ve consciously chosen to obtain their prescriptions
from Target for whatever reason or vice versa. But the “strategic relationship”
is a win-win for CVS on numerous fronts, including its CVS/caremark PBM.
First, the acquisition allows the
company to cheaply and quickly expand its retail presence. Chief Financial
Officer Dave Denton explained during a June 15 conference call that the deal
enables CVS to immediately boost its retail reach by more than 1,600 outlets
“at roughly one-fifth the capital cost of building the equivalent number of
full-size CVS/pharmacy stores.”
The transaction includes nearly 80
clinic locations that will be rebranded as MinuteClinic and plans to open 20
new clinics in Target stores within three years of the close of the deal. This
gets CVS closer to its goal of operating 1,500 clinics by 2017, and enhances
its leverage against major competitors Rite Aid Corp. and Walgreens.
The deal will also allow CVS to grow
its retail presence in new markets such as Denver, Portland, Seattle and Salt
Lake City, which may give the PBM more recognition with plan sponsors in those
markets. Finally, the acquisition allows CVS to familiarize more customers with
its pharmacy care and clinical programs Maintenance Choice, Pharmacy Advisor
and Specialty Connect. And as CVS President and CEO Larry Merlo indicated
during the conference call, the partnership gives CVS “another advantage for a
client to choose CVS/Caremark.”
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