Mark Nemhauser

CVS-Caremark Deal Would Create Pharmacy Powerhouse

I am a small investor, own CMX, and am a pharmacist. The merger with CVS is horrible and I certainly do not understand how it passed regulatory muster. Remember all of the past combinations of big-pharma and PBM's? How did that work out? And how in the world did that pass muster? The Merck-Medco combo comes to mind. Medco is still trying to get away from that stink. Letters to doctors and patients to switch to "less expensive" Merck meds (I guess that when you own the meds, they are indeed less expensive ... to Medco, but not to pharmacies and patients. Now we have a situation whereby if CVS buys CMX, it will certainly lure patients to CVS ... I cannot understand how that would be any more legal than a doctor steering patients to a particular pharmacy, which is illegal in most states.

It would make far more sense for Caremark shareholders to take the EXRX bid, although the board and the officers would make far more money, for themselves, with CVS. Imagine, CVS buys the company, the officers and board of Caremark are given their golden parachutes, and then they stay on with CVS. That adds value to stockholders? I think not!

As for Medicare D, most pharmacies and PBM's are making a LOT of money, but especially the mail order pharmacies. Even if the government does do something to control costs, the event will remain the same, albeit at a smaller margin. WalMart's $4 Rx plan for generics means nothing. Try going to a WM with a generic Rx ... and then try to figure out how it is saving people money. Only 180 meds out of 20,000 generics; only a 30 day supply at what WM figures the correct dose (their calculations are strange, indeed). As almost 95% of prescriptions are covered by some third party, this stupidity will not affect pharmacies, be they large chains or successful independent stores. Thus, no harm to other pharmacies. Costco doesn't buy into it, RAD doesn't, CVS doesn't ... it seems that only Target, and perhaps Walgreens are doing, or thinking of doing, the same stupid thing. Good luck to them.

Back to Caremark. They made a great move by acquiring Advance PCS. They have stolen contracts from Medco. Adding ESRX to the mix is a great move, and an excellent advantage to shareholders, while not giving away tons of money to the Board, and the officers, but keeping it as shareholder value. That's how I'm voting my proxy ... against the "white" and for the "gold" ... Would you believe that I've received 5 "cold calls" from Caremark's advisors trying to tell me what a great deal the merger with CVS would be? From my point of view, Caremark's Board is getting a bit scared!