June 12, 2008

Medco may lease vacant Boone Meadow school

By Robert Annis
robert.annis@indystar.com

Medco Health Solutions will start revving up its operations in August -- from the vacant Boone Meadow Elementary School.

The company is close to signing an agreement with the Zionsville School Corp. to lease part of the school from Aug. 4 to May 29, 2009. Medco will pay Zionsville Schools $26,500 over the course of the lease to rent the second floor media center and adjoining office space for its operations.

Medco spokeswoman Ann Smith said Wednesday the company would use the school as an interim workspace for general manager Richard Jones and human resources personnel to hold training classes, construction meetings and other business.

"It seems like it'll be a great partnership," Smith said, adding they haven't received a final proposal from the school district yet.

The New Jersey-based company announced in December it would build a $140 million, 318,000-square-foot automated pharmacy in the AllPoints at Anson development off I-65. The facility, which spans the size of 6.5 football fields, is scheduled to open in spring 2009.

The facility is expected to employ 1,300 people by 2012, with an average wage of $53,000.

Boone Meadow Elementary was a point of contention in the recent School Board race because it's sat vacant for the past two years. Built in 2003, it most recently served as the temporary home for Zionsville West Middle School. It's scheduled to reopen as an elementary for the 2009-10 school year.

Before approving the tentative agreement at its meeting this week, several Zionsville School Board members expressed concern the lease price was too low. Director of Transportation Charlie Jones said the price would barely cover the utilities.

Superintendent Scott Robison acknowledged the low price, but said he hoped it would help the health-services giant see the school district as resource and a community partner.

The agreement passed by a 5-0 vote with the caveat that Medco would pay for any utility overages. Medco has not finalized the agreement.

The lease also includes a clause that would allow the district to evict Medco if the school is needed because of an emergency or other disaster.

CVS Caremark Wins GE Drug Benefit Business From Medco Health

June 03, 2008: 03:34 PM EST

-By Dinah Wisenberg Brin, Dow Jones Newswires; 215-656-8285; dinah.brin@ dowjones.com

CVS Caremark Corp. (CVS) has won General Electric Co.'s (GE) pharmacy benefit business from rival Medco Health Solutions Inc. (MHS), effective Jan. 1, 2009, a move that doesn't change Medco's earnings outlook for this year.

Analysts estimate GE represents roughly $1 billion in annual pharmacy benefit management business, give or take some $200 million. Medco logged $44.5 billion in revenue last year. CVS Caremark, the company formed from the March 2007 merger of drug retailer CVS and pharmacy benefits managers Caremark Rx, generated $76.3 billion.

A CVS Caremark spokeswoman, via email Tuesday, confirmed the move, which investment firm analysts reported in notes this week. A Medco spokeswoman said the company also understood that GE would be moving its business. Specifically, CVS Caremark has been awarded a three-year contract to provide pharmacy benefit management services to GE's employees and retirees. The contract win was included in the $3 billion of new contracts that CVS Caremark announced during its first-quarter earnings conference call last month, said CVS Caremark spokeswoman Carolyn Castel. Neither CVS nor Medco would provide specifics on the size of the GE account.

JPMorgan believes the contract is valued at roughly $750 million a year and estimates it will amount to 1 cent to 2 cents in adjusted earnings per share for CVS Caremark next year, or roughly 0.5% of JPMorgan's estimate of $2.90 a share. The firm estimated that contract move could mean a 4- cent to 6-cent hit to Medco's per-share earnings in 2009, or 1.8% of JPMorgan's $2.77 estimate.

Thomas Weisel Partners analyst Steve Halper said he isn't worried about Medco, in spite of the GE contract loss, as pharmacy benefit management industry earnings should reaccelerate starting in 2009. That's when more big name-brand drugs start to lose patent protection, meaning there will be new generic drugs on the market, which help PBM companies' bottom lines.

While every major contract win for CVS Caremark supports the company's thesis for the merger, there's not necessarily a seismic change occurring that would hurt Medco, Halper said.

JPMorgan believes price was a key factor in the GE decision, in addition to service and CVS Caremark's combined retail-PBM offering.

"We don't believe the competitive environment in the PBM industry has changed with respect to pricing," JPMorgan said. Medco should do well in the marketplace going forward, in spite of the GE contract loss, the firm said, predicting that Express Scripts Inc. (ESRX) will have a harder time competing with the two larger PBM companies over time.

In April, AT&T Inc. (T) awarded its consolidated PBM business to CVS Caremark, effective in 2009. Under existing contracts, CVS Caremark and Medco each service different businesses within AT&T.

Medco has had "an excellent sales year," with wins of clients from CVS Caremark accounting for about $4 billion of the company's $5.1 billion annualized in new business for 2008, said Medco spokeswoman Ann Smith. (On a net basis, Medco has achieved $4.6 billion in net new sales for this year.)

Medco has yet to issue its 2009 earnings guidance. The company plans to provide an update on its 2009 selling season during its second-quarter conference call and to provide guidance when it releases third-quarter earnings, as it normally does.

Medco Chairman and Chief Executive David Snow Jr., addressing shareholders at the company's annual meeting last month, said Medco is "off to a tremendous start in 2008," including a 98% client retention rate.

Medco traded recently at $48.19, up 64 cents, or nearly 1.4%, while CVS traded at $43.12, up 44 cents, or 1%.

Ranbaxy gets US patent office booster dose in Lipitor case
29 Apr, 2008, 0100 hrs IST, TNN

NEW DELHI: In what would give a leg up to Ranbaxy, the US Patent and Trademark Office (USPTO) has rejected Pfizer’s appeal to re-issue patent for its $13-billion anti-cholesterol drug, Lipitor, in the US. This means that India’s largest drug company, Ranbaxy, is on course to launch its own low-cost version of the world’s largest selling drug in March, 2010, in the US.

Ranbaxy Laboratories is the first generic company to challenge Pfizer’s patent for Lipitor. With the USPTO rejecting Pfizer’s appeal, Ranbaxy can now launch a similar drug and sell it for 180 days without any competition from generic companies from March, 2010. According to estimates, Ranbaxy can generate around $1 billion from the drug during the exclusivity period in the US alone.

However, the USPTO’s decision is not the final verdict and Pfizer can apply again for the patent. “An initial rejection is not uncommon in re-issue application proceedings. Pfizer will now review the communication from the Patent Office and respond as appropriate to address the issues raised by the examiner, “ a Pfizer spokesperson in the US said.

Riding on various litigations, Ranbaxy had invalidated patent no 995 of Liptor in 2006, which allowed the Indian company to advance its launch date by 15 months. Lipitor’s patent in the US expires in June 2011. However, in January last year, Pfizer moved the USPTO to reissue a patent on Lipitor’s calcium salt patent to extend its monopoly on the drug till 2011. When contacted, a Ranbaxy spokesperson said, ”The USPTO decision to reject Pfizer’s application is self explanatory.”

Pfizer has been aggressively trying to protect the exclusivity of the world’s largest selling drug. Last month, the US drugmaker filed two separate suits in the Delaware district court alleging that Ranbaxy would infringe upon the process patents of Lipitor and a combination drug of Lipitor if the Indian company were to sell its low-cost versions in the US market. Its suits sought to prevent Ranbaxy from launching its generic versions till 2016. Ranbaxy and Pfizer are locked in legal battles for the drug in over 15 countries.

Ahead of the Bell: Medco Health Upgraded
Friday April 11, 8:51 am ET

Medco Health Solutions Rises After Cred Suisse Upgrades on Growing Generic Drug Sales

NEW YORK (AP) -- A Credit Suisse analyst said stronger-than-expected sales of generic drugs will help Medco Health Solutions, and upgraded the stock to "Outperform" from "Neutral."

Glen Santangelo said a number of threats to Medco's profits, including the potential loss of a contract with insurer UnitedHealth Group Inc., are now included in the stock price, and investors are missing the company's potential profit growth.

Generic versions of several popular drugs reached the market in the first quarter, which was earlier than expected. Santangelo said that should help Medco report continued strong profit growth. He added that prescriptions of generic cholesterol drugs are likely to increase.

Drug distributors like Medco benefit from greater sales of generic drugs, as they offer higher profit margins.

Shares of Franklin Lakes, N.J.-based Medco Health Solutions Inc. rose 45 cents to $45.14 in premarket trading. Shares closed at $44.69 Thursday, and are down 13 percent since Feb. 20.

Medco Acquires Majority Interest in Europa Apotheek; Delivering Innovation, Clinical Quality and Lower-Cost Solutions to Fast-Growing German Health Care Market

FRANKLIN LAKES, N.J. and DUSSELDORF, Germany, April 8, 2008 /PRNewswire-FirstCall/ -- Medco Health Solutions, Inc., (NYSE: MHS), which developed and manages the world's largest and most advanced pharmacies, today announced it has acquired a majority interest in Europa Apotheek Venlo, a privately held company providing clinical health care and mail-order pharmacy services in Germany.

Founded in 2001, Europa Apotheek is one of Europe's leading mail-order pharmacies, serving the Dutch and German health care markets from its operations, which are based in the Netherlands.

Germany is Europe's fastest-growing market for pharmacy health care services, with $35 billion in annual spending, growing at a rate of 5 percent per year. Mail-order pharmacy services are expected to reach $3 billion by 2012, as consumers and payors with increasing frequency embrace the convenience, safety and cost savings provided through mail-order.

Europa Apotheek specializes in treating patients with chronic diseases, such as diabetes, heart disease, arthritis, multiple sclerosis and HIV. Europa Apotheek also provides a centralized dispensing-by-mail service through drop-off locations in Drogerie Markt stores, Germany's second largest drug store chain - a distribution model consistent with Medco's central-fill service, originally pioneered in the United States.

Under the transaction, which is subject to regulatory review in Germany, Medco acquired a majority equity interest in Europa Apotheek for approximately $120 million, with additional future consideration for achieving performance targets.

"With shared values focused on improving clinical care and patient safety, Europa Apotheek and its management team will extend its leadership in helping to ensure that quality pharmacy care is increasingly affordable in one of the world's fastest-growing healthcare economies," said John Driscoll, Medco president for New Markets.

"German health care providers must achieve financial stability, and our innovative approach to pharmacy care is increasingly providing a more affordable solution. Our desire to deliver unmatched clinical excellence, dispensing accuracy and cost reduction is perfectly aligned with Medco's strengths, which will enhance our ability to serve our patients and accelerate our growth," said Klaus Gritschneder, Europa Apotheek board member.

Driscoll credited Europa Apotheek's executive leadership team for the company's rapid growth and continued success. He noted their commitment to improving clinical and financial outcomes for patients and payors is well-matched with Medco's.

"This is a logical extension of our international strategy - leveraging our proven proprietary technologies and, with best-of-breed-partners, delivering solutions to the challenges of managing health care costs and improving clinical care abroad," Driscoll said.

In addition to improving clinical quality, Medco's expertise in distribution, productivity, Six-Sigma process control and purchasing will help to create greater efficiencies for Europa Apotheek, improve patient safety and reduce costs in Germany's health care delivery system.

Medco Health Solutions Buys Majority Equity Stake in Europa Apotheek Venlo for About $120M

FRANKLIN LAKES, N.J. (AP) -- Medco Health Solutions Inc. said Tuesday it bought a majority equity stake in Europa Apotheek Venlo, a provider of clinical health care and mail-order pharmacy services, for about $120 million.

The deal, which is subject to German regulatory review, also includes potential performance-based payments.

Privately held Europa provides services to the Dutch and German health care markets. The Netherlands-based company specializes in treating patients with ailments including heart disease, HIV and arthritis.

Medco, a pharmacy benefit manager, had 2007 revenue of more than $44 billion.

Prescription plans may decide two drugs' fate

Insurers could stop backing the use of Vytorin and Zetia

Wednesday, April 02, 2008

BY JEFF MAY

Star-Ledger Staff

Investors had their say earlier this week about sales prospects for the cholesterol drugs Vytorin and Zetia when they sent shares of Schering-Plough and Merck to their lowest levels in years.

But a more obscure group of judges has the power to make the New Jersey companies' top executives, Fred Hassan and Richard Clark, really squirm.

Over the next few months, the nation's prescription plans will decide whether millions of consumers will continue to have access to the drugs, which together pulled in $5.1 billion last year. Merck and Schering-Plough jointly market the cholesterol medicines.

Cigna, a health insurer that covers 9.4 million people in the United States, said yesterday it would no longer recommend Vytorin as an alternative therapy for patients who currently use higher-priced, off-plan cholesterol drugs that aren't working.

"That particular step therapy is being suspended," said Cigna spokeswoman Lindsay Shearer.

The decision followed a recommendation yesterday by the American College of Cardiology that patients should only use Vytorin or Zetia if statins such as Lipitor or Zocor fail to produce results. A study released over the weekend said Vytorin -- a combination of Zetia and Merck's statin Zocor -- was no better than Zocor alone in staving off clogging of the arteries, a precursor to heart attacks and strokes.

Shares of Kenilworth-based Schering-Plough, which developed Zetia, fell 26 percent on Monday. Yesterday it gained 34 cents to $14.75. Merck, of Whitehouse Station, dropped 15 percent Monday, before gaining 37 cents to $38.22 yesterday.

Cigna's Shearer said the company's review panel, known formally as the pharmacy and therapeutics committee, would decide later if the insurer would make changes in its overall coverage of the drugs.

One of the nation's largest pharmacy benefit managers, Medco Health Solutions of Franklin Lakes, said it also will look at the two drugs its own review committee meets later this month, said spokeswoman Jennifer Leone Luddy.

Vytorin and Zetia are currently listed as "may add" drugs on the company's drug formulary, the most common recommendation, she wrote in an e-mail.

"(It) means a drug's safety profile is good and there is a therapeutic benefit that outweighs any potential risk," she wrote.

The study, known as Enhance, found no safety risk to taking the drugs. The question is whether it prevented heart disease.

For now, other major pharmacy benefit managers such as CVS Caremark and Express Scripts are holding tight on their recommendations for the two drugs, pending a review.

"There is no change in procedure," said Steve Littlejohn of Express Scripts. "I would add, however, that in the statin class we recommend promoting the first use of generics wherever clinically indicated. That's been our approach for some time."

Medco Partners to Develop Patient-Safety System for Prescription Drugs in Sweden

FRANKLIN LAKES, NJ, STOCKHOLM, Sweden, March 31 /PRNewswire-FirstCall/ -- Medco Health Solutions, Inc. (NYSE: MHS) today announced a collaboration with Sweden's government-operated retail pharmacy authority, Apoteket, to develop and test the first automated electronic prescription-review system to improve clinical and financial outcomes for Swedish patients and the country's health care system.

Under the agreement, Medco and Apoteket will jointly develop an advanced, customized system to perform safety-checks on each prescription prior to dispensing - warning pharmacists of drug interactions, excessive dosing or any other issue related to dispensing a prescription. Such drug utilization review systems are commonplace today in the United States, but do not exist in many other countries.

Adverse drug events are a considerable and urgent problem. In Sweden it is estimated that 30 percent of the emergency care visits and 10 percent of all hospital admissions are the result of prescription drug-related issues.

"As more patients in Sweden are routinely treated by larger numbers of doctors, and in the future they may use different pharmacies, this system will provide a safety net for patients and their physicians, who may not be aware of all the medicines that may have been prescribed by other clinicians," said Erik Thorsell, Apoteket's executive for quality assurance.

Currently, all Swedish pharmacies are operated by Apoteket, the government entity responsible for prescription pharmacy care nationwide. The new system is being developed as Sweden moves toward deregulating the retail pharmacy market in 2009.

"Many of the health care issues abroad are different than those faced in the United States, however the quest for patient safety, clinical excellence, dispensing accuracy and lower cost remains the same," said John Driscoll, Medco president for New Markets. "We are committed to supporting payors and patients in any market where our innovative and proprietary technologies could help to lower the cost of delivering high-quality clinical care."

The utilization review system to be developed for Sweden is intended to become part of the common high-technology infrastructure used by all retail pharmacies in the future, when the Swedish retail pharmacy market is deregulated and competitors enter the marketplace. This would ensure comprehensive, uniform and consistent reviews of each prescription, for all patients, independent of which pharmacy is used to dispense the medicine.

"We are delighted that the Swedish government endorses the development of these technologies. Our combined experience will allow us to quickly develop and implement an industry-leading drug utilization review system, customized for the Swedish market - achieving considerable savings for the health care system and improving the quality of care for individual patients," said Stefan Carlsson, Apoteket managing director.

Added Driscoll: "We are pleased to work with Apoteket in support of this initiative to embrace innovative and proprietary technologies that will help to raise the standards for quality pharmacy care, improving financial and clinical outcomes for patients and society. This places Sweden at the forefront across Europe for advancing the standards for pharmacy care provided to their citizens."

Financial terms of the transaction were not disclosed and this transaction is not expected to have an impact on Medco's earnings or results of operations.

CVS signs $500-million deal in Texas

CVS Caremark Corp. has won a pharmacy benefits contract with the Texas state pension agency worth nearly $500 million a year. The Employees Retirement System board of trustees announced this week that 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 as the PBM servicing the Texas pension agency. Brokerage house Wachovia Capital Markets LLC expects the Texas contract will have a slight impact on CVS’ annual earnings, adding 1 to 2 cents per share. The PBM side of CVS Caremark, coupled with pharmaceutical sales in its stores, account for about 85 percent of the Woonsocket company’s total revenue, company executives said last month in a conference call with investors. Last year, the Caremark side of the business saw revenue rise 13 percent to $11.6 billion: mail-order sales rose 7 percent, to $4.3 billion, and retail sales climbed 17 percent to $7.22 billion.

CVS WINS, MEDCO LOSES IN CONTRACT TIFF
Sometimes the pharmacy benefit management business can be reduced to a zero-sum game. That appears to be the case in a recent tussle over a contract. The loser: Medco Health Systems, which has surrendered a contract to supply drug delivery services to the 450,000 members of the Texas Employee Retirement System, according to UBS. The winner: CVS Caremark, which has taken the contract, which covers nearly $500 million in pharmaceuticals spending, away from its rival. The two next figure to tilt over an expiring contract to provide employees of AT&T with PBM services; the current contract is divided between the two service providers.

Feb. 25, 2008, 5:18PM
Medco Falls on Contract Concerns

NEW YORK — Shares of pharmacy benefit manager MedcoHealth Solutions fell Monday as investors appeared concerned the company might lose its contract with managed care provider UnitedHealth Group Inc.

"Medco's shares are off today in response to a competitor's comments regarding Unitedhealth's discussion of the Medco contract in meetings with investors," said Cowen and Co. analyst Kemp Dolliver in a note to clients.

The contract represents about 22 percent of Medco's revenue and an estimated 2 percent to 3 percent of earnings per share, or about 4 to 6 cents per share, said Dolliver. The deal runs through 2009 with an option for a two-year extension.

Reportedly, Unitedhealth's management has indicated they plan to make a decision on the contract in the next 90 days.

Dolliver said it agrees with Medco that the contract has very low profitability for several reasons, including the fact that Unitedhealth already handles many prescription benefits managers in-house and therefore doesn't need to pay for all of Medco's services.

"We think today's price weakness embeds a significant portion (one-half) of the likely downside if United HealthCare were to announce a decision to go in-house in the next 90 days," said Dolliver. "Even though the consensus expects Medco to lose the contract, we think the market would react negatively initially."

He suggested, however, that going in-house might be something Unitedhealth may want to postpone until after 2011 in order to avoid service disruptions, given their current customer service challenges.

Medco's stock fell $1.59, or 3.2 percent, to $48.76. Over the past year, the stock has ranged between $28.96 and $54.62.

Amid success, Medco faces changes

by Susan Todd/The Star-Ledger

Friday February 22, 2008, 6:15 AM

Medco Health Solutions may not be a household name, but as the nation's largest pharmacy-benefits manager, it plays a vital role in dispensing 2 million prescriptions a week in the United States.

Medco works with its clients -- managed-care organizations, state governments and large employers -- to reduce prescription drug costs, leveraging its size and scale, Ã la Wal-Mart, to get the best prices on medicines.

While mail order is a huge part of Medco's business, the New Jersey company also works with a network of retail pharmacies, managing the financial transactions between pharmacists and payers. On Tuesday, the company posted 2007 earnings of $912 million on revenue of $44.5 billion.

"They're an invisible force," said Arthur Henderson, a health-care industry analyst with Jefferies & Co.

A few years ago, Henderson noted, employers faced prescription-drug expenses that were increasing as much as 12 percent a year. Medco drove the rate down to 2 percent.

"That's incredibly significant," he said. "I'd hate to think of where we'd be if we didn't have pharmacy-benefit managers in place."

In an interview last week at his Franklin Lakes office, Medco Chief Executive David Snow discussed strategy, the possibility of expanding into Europe and his thoughts on the presidential race.

Q: Wal-Mart could be moving into the pharmacy-benefits business. Are you worried?

A: A lot of people shake in their boots when they hear the name Wal-Mart in any industry. This is a very, very complicated business with serious barriers to entry. I just don't think they're going to pull it off. You just don't snap your fingers and say you're going to be a pharmacy-benefits manager.

Q: Why are generic drugs so good for Medco's business?

A: We make our money on generics, because by doing that, we are completely aligned with the best interests of our clients. We do not make money on branded drugs at our mail pharmacies. We make zero dollars. However, 84 percent of the drugs going through those mail facilities are branded drugs.

Since 2006, enormous volumes of branded drugs have gone off patent with generic availability. Both 2006 and 2007 were fantastic years for branded drugs going generic. There is still about $80 billion worth of branded drugs scheduled to go off patent between now and 2015.

Sixty-three percent of all scripts (prescriptions) are generic now -- only 37 percent are brand. From a client's perspective, from the person who pays the bills perspective, only 16 percent of the dollars are generic. The rest represents 84 percent of the payer's expense. We try as best we can -- and we're very good -- at appropriately moving from brand to generic.

I could make money on those brands, but I choose to make it on generics, so there's no question about my line of sight with my clients. If I'm incented to move brands, my client's got to say, "My God, are you serving my best interest?"

Q: Do your pharmacists encounter resistance from consumers when it comes to generic drugs?

A: If you look at retirees, they love generics because it saves them significant money. It's a great way to avoid getting into that doughnut hole where they're 100 percent responsible for the cost of their drugs.

It's doctors, too, who used to be brainwashed by brand manufacturers with all the sampling and all the reps in their offices. They're recognizing that they're throwing the system's money away when they prescribe the brand when it doesn't bring any incremental value over these blockbuster drugs that are now generics. Docs are much more likely to write a generic script right out of the box now.

Q: Is Medco planning to expand into Europe?

A: We're examining it. We have some very significant proprietary software and proprietary technology that has direct applicability in Europe.

An interesting statistic in England, for example, is that two-thirds of all emergency room visits are tied to drug interactions. Over here, the pharmacy-benefit managers message retail pharmacies, they have programs and software that warn of drug interactions, so a pharmacist won't dispense without calling a doctor. In England and in Europe, generally, they don't have that.

There are two types of interest that we're seeing. One scenario is the socialized system, where it's top-down government control. They're interested in the technologies because they can implement things. Then you have the scenario in several countries where they're privatizing drug benefits. We're actually getting inquiries from those dominant players saying "I want to sustain my dominance, will you partner with us in this new privatized market?" Both scenarios are very interesting to us.

Q; Medco's business may be booming at the moment, but what are some of the challenges going forward?

A: I worry about the business-to-business brand issue. If employers decide over time to get out of Medicare responsibility for their retirees, I need to be able to capture those people. A big part of my business is those retirees. I need to deal with that.

What's interesting is, typically, what you worry about is a massive change politically around a presidential election. I've been in health care for 30 years now, and it's the first time I can say we're just fine no matter if the Democrats or the Republicans get into office.

Q: But from a business perspective, do you have a preference?

A: I'm a Republican. I've always been a Republican, but when I look at what the Democrats are willing to tackle and what they're likely to do, there are two fundamental things, and they're both good.

Number one, they will create a pathway for biogenerics. There's no road map approved by the Food and Drug Administration to create a generic substitute when biologics expire. President Bush just pushed through a generic-pathway piece of legislation. The Democrats are much more likely to do a stronger version. The Republicans tend to be a little too sympathetic to brand pharma, so they make rules skewed a little too heavily to brand pharma.

The second thing the Democrats are likely to tackle is a national safety net for the uninsured. That would be great for society and Medco. And here's why: The uninsured population today is about 47 million people. When they get ill, they access care in the most expensive places, like hospital emergency rooms. They tend to not get routine care, so they end up needing more expensive care down the road. We all pay for it. I think broad, bipartisan support would be there for a national solution. From a Medco perspective, it's great news, because it's a brand new market we don't serve today.

Sent: Wednesday, January 23, 2008 10:10 PM

Subject: Wal-Mart to offer PBM Services.....

Wal-Mart Expands Drug Reach

Retail Titan to Take On
Role of Helping Employers
Manage Pharmacy Benefits

By ANN ZIMMERMAN and BARBARA MARTINEZ
January 24, 2008

Wal-Mart Stores Inc. is stepping into the lucrative pharmacy-benefits arena, in a move likely to shake up a field that has been dominated by just a handful of players.

In a speech yesterday before 7,000 Wal-Mart store managers at a meeting in Kansas City, Mo., Chief Executive Lee Scott said Wal-Mart is initiating a pilot program to help "select employers ... manage how they process and pay prescription claims."

[Lee Scott] Pharmacy-benefit managers, or PBMs, are the companies behind the cards that insured patients present at drugstores in order to fill their prescriptions. Most U.S. employers contract with PBMs to provide prescription-drug coverage to their workers, and in exchange, the PBMs promise to negotiate lower prices from retail pharmacies and obtain rebates from drug manufacturers. PBMs also may own their own mail-order pharmacies, and increasingly make much of their profits from big markups on generic drugs.

A record number of blockbuster drugs are going generic, fueling strong profits and rising revenue among the PBMs. CVS Caremark Corp. is expected to report revenue of $76.13 billion for 2007, while Medco Health Solutions Inc. is expected to post revenue of $44.7 billion and Express Scripts Inc. $18.4 billion, according to Morgan Stanley. Combined, the three companies processed or filled 387 million prescriptions in the third quarter of 2007.

Wal-Mart could take a chunk of that; the company is already the third-largest pharmacy in the U.S. in terms of sales, after CVS and Walgreen Co.

"Our conversations with employee-benefit managers suggest they're open to alternative approaches, so there's room in the marketplace for a different type of offering," says David Veal, PBM analyst at Morgan Stanley. "As the U.S. economy gets tougher, employers are going to look for new ways to control costs, and Wal-Mart will find a receptive audience" for new solutions to high drug prices. But, he notes, Wal-Mart will still have convincing to do. "Traditionally, employers are risk-averse; they're hesitant to move just on price."

In recent years, the Bentonville, Ark., retailer has attempted to increase sales by offering less-expensive medical products and services. Wal-Mart also began opening medical clinics in some of its 4,000 U.S. stores. And it helped spearhead an effort with other corporations to create a system of electronic medical files. Wal-Mart expects all of its employees' medical files to be electronic by 2010.

In 2006, Wal-Mart announced it was selling $4 prescriptions for hundreds of generic drugs to the public. The program didn't affect PBMs very much because many of the $4-prescription buyers were people without drug coverage, observers say. The company currently offers more than 350 prescriptions for $4. Other retailers were forced to match Wal-Mart with their own $4 offerings.

But now, Wal-Mart seems to be aiming directly at PBMs' bread and butter: the employers that provide drug insurance to millions of workers.

Wal-Mart wouldn't name the companies, and details of how this would be achieved were sketchy. But Mr. Scott said that by taking out unnecessary costs he believes Wal-Mart can save employers more than $100 million a year.

A Wal-Mart spokesman said one possibility would be to have a company contract with Wal-Mart to fill all or at least a majority of employee prescriptions.

Wal-Mart wouldn't specifically say it was getting into the PBM business. "We know the ways we operate help customers save money and we think we can do that for employers. This is an opportunity to be in that space," said Wal-Mart spokesman Nick Agarwal.

One of the ways Wal-Mart is exploring lowering employer health-care costs is through its $4 generic prescription drugs.

Mr. Scott said the retailer also would seek partnerships with doctors and other providers to increase the number of electronic prescriptions Wal-Mart fills to eight million from about 1.6 million by the end of 2008.

Jan 23 2008 21:50

Wal-Mart (NYSE:WMT) is to launch a further challenge to the existing structure of the US healthcare industry, with a plan to sign contracts directly with employers to process and pay prescription drug claims.

The move will take the retailer into territory dominated by companies such as Medco (NYSE:MHS) , Express Scripts (NASDAQ:ESRX) and Caremark (NYSE:CMX) , the prescription benefit managers (PBMs) that negotiate bulk purchase drug discounts for employers and health plans.

Lee Scott, chief executive, told Wal-Mart managers meeting in Kansas City on Wednesday that the retailer believed it could reduce the drug costs of participating employers by $100m in this year alone. "Our approach will be based on taking out unnecessary costs while providing high-quality healthcare products and services," he said.

Wal-Mart declined to name the employers involved and said details of the arrangements were still being worked out. The retailer said the move was aimed at building upon Wal-Mart's $4 generic drug pricing programme, launched in 2006, by enabling employers to see the benefits of the lower cost pricing.

While Wal-Mart says its low-cost prescription drugs have saved uninsured customers millions of dollars, the benefits of opting for $4 generics have not been passed on to most employers' health plans owing to the complex pricing structures agreed between employers, their health insurer and the PBM that negotiates drug pricing.

The PBMs have previously largely dismissed the threat posed by the $4 generic programme, now widely copied by Wal-Mart's competitors, to their business models.

Wal-Mart also said on Wednesday that it planned to promote the use of electronic, rather than handwritten, prescriptions at its pharmacies.

The retailer also said that it planned to provided all of its more than 1.3m US employees, as well as their families and retirees, with portable electronic health records by the end of 2010.

HIP Health Plan of New York Awards Pharmacy Benefit Contract to Medco

Medco to provide mail-order pharmacy services for 1.3 million HIP members through 2011

NEW YORK and FRANKLIN LAKES, N.J., Jan. 14 /PRNewswire-FirstCall/ -- HIP Health Plan (HIP), consisting of HIP Health Plan of New York, ConnectiCare and Vytra Health Plans, today announced it has awarded its mail-order pharmacy services contract to Medco Health Solutions, Inc. (NYSE: MHS), effective today.

"HIP is dedicated to providing its members with world-class care at the most reasonable and affordable cost. Working with Medco, our members will gain access to award-winning customer service and convenient mail-order pharmacies, and also will have access to Medco's advanced pharmacy services to deliver improved clinical and financial outcomes for our clients and members," said Dr. Dan Dragalin, Chief Medical Officer, HIP.

Added Medco Chairman and CEO David B. Snow Jr.: "Medco appreciates the opportunity to serve HIP members, who now will have access to Medco's advanced mail service pharmacies to improve member health and reduce costs. Through Medco's outstanding pharmacy staff, we will provide HIP members with unmatched mail-service turnaround times, superior pharmacy practice standards to ensure patient safety, and 24 by 7 access to a pharmacist when specific guidance about a medication is needed."

Medco is also in discussions with Group Health Incorporated (GHI), a HIP affiliate company, to provide pharmacy services for its members.

About HIP

HIP Health Plan of New York is among the largest health plans in New York. HIP offers a broad array of managed care products and services, including HMO, PPO, EPO, POS and ASO plans. HIP's provider network, including subsidiaries, comprises nearly 43,000 providers in over 72,000 locations in New York, Connecticut and Massachusetts. In 2006, Group Health, Inc. (GHI) and HIP affiliated under parent company EmblemHealth. The combined membership of HIP and GHI totals more than four million individuals with nearly 92,000 physicians and other providers in more than 142,000 locations. HIP's Web site, hipusa.com, is available in English, Spanish, Chinese and Korean.

Sent: Tuesday, December 18, 2007 6:33 PM

Subject: VPGM Rich Jones Leaving Las Vegas..........Indiana

Medco Chooses AllPoints at Anson in Whitestown, Indiana as Site for the World's Largest, Most-Advanced Automated Pharmacy
Tuesday December 18, 10:30 am ET

Richard P. Jones II named Vice President and General Manager of facility that will dispense up to one million prescriptions a week

FRANKLIN LAKES, N.J., Dec. 18 /PRNewswire-FirstCall/ -- Medco Health Solutions, Inc. (NYSE: MHS - News), one of the nation's leading pharmacy benefit managers, today announced that AllPoints at Anson in Whitestown, Indiana, will be the home of world's largest and most-advanced automated pharmacy, capping a nearly year-long search that spanned 48 states.

Medco selected Anson after narrowing its selections in early November to three different counties in central Indiana, where 1,300 new jobs will be created.

"We found all of the potential locations attractive for the facility. However, Anson stood out because of the attractive proposal and feature-rich site provided by developers Browning Investments and Duke Realty. There is a nice parallel between the Medco Therapeutic Resource Centers(TM) and the Anson planned community concept to create a new center of commercial, residential and civic activity in the region," said Medco President and Chief Operating Officer Kenny Klepper. "Anson will now be home to the pharmacy of the future -- a facility that uses the best of automation to safely dispense medications."

Medco also announced today that Richard P. Jones II will be vice president and general manager (VPGM) of the planned $140 million pharmacy, which takes up an area equal to six and a half football fields and will use its technology to safely meet growing nationwide demand for lower cost medicines. Jones, currently the VPGM of Medco's Las Vegas Prescription Dispensing Pharmacy, is a seasoned veteran with more than 20 years of Medco pharmacy experience.

"To be part of the development of our newest automated pharmacy from the ground up is a great opportunity. Medco is taking breakthroughs in science and technology to add a level of specialization and personalization to pharmacy care that is unique to the industry," said Jones.

AllPoints at Anson, a joint venture between Browning Investments and Duke Realty Corporation, is a 616-acre development that will eventually be home to 7.4 million square feet of industrial space. It's located on the north campus of Duke's 1,700 acre mixed use, planned community in southern Boone County.

"The growth and development of Medco will mirror the growth and development of Anson, where employees can work, live, shop, and play in one place that's designed around their needs. We truly believe that AllPoints at Anson offers them more than just a site; it gives them a stake in a thriving new community," said Tom Dickey, Vice President and General Manager of Anson.

Medco finalized terms to buy the 28-acre parcel in Anson, which is located at the northeast corner of the intersection of Anson Boulevard and County Route 450, and Browning-Duke plans to start construction in the spring of 2008. This new pharmacy is expected to dispense up to one million prescriptions a week at greater than Six-Sigma® accuracy from its use of robotics, bar code scanners and sophisticated information technology networks, complementing Medco's automated mail facilities in Las Vegas and Willingboro, N.J.

The state's business-friendly environment, modern transportation infrastructure, skilled labor pool and proximity to several schools of pharmacy, including Butler University, Purdue University and Ivy Tech, were notable factors in the site selection process. The next-generation mail-order facility will employ pharmacists, pharmacy technicians, engineers, pharmacy support, managers and other staff.

"The low property taxes in Whitestown and the quality and low cost of utilities in Boone County were also a contributing factor to the final decision," said Boone County Economic Development Corporation's executive director Kristie McKillip.

Medco intends to provide competitive salaries and a comprehensive employee benefit package for a wide range of positions. Hiring is expected to begin in the second quarter of 2008, with the majority of the hiring expected in 2010 and 2011.

The Indiana Economic Development Corporation offered Medco up to $18.25 million in performance-based tax credits and up to $850,000 in training grants based on the company's job creation plans. Boone County offered a $5 million cash grant for infrastructure and technology purchases. The town of Whitestown offered $7.8 million in property tax abatements, made possible through a state program.

The Indy Partnership, Central Indiana's local economic development organization, and BioCrossroads, Indiana's initiative to grow the life sciences, partnered with the Indiana Economic Development Corporation to coordinate Indiana's pursuit of the Medco investment. The Boone County Economic Development Corporation played a critical role in coordinating local incentives.

Transforming the Practice of Pharmacy

Coupled with its unparalleled dispensing pharmacy practice, Medco has created an industry leading end-to-end specialized pharmacy practice model.

Medco is leading the way by transforming pharmacy care from a "generalist" practice to a "specialist" practice. Specially trained pharmacists are becoming experts in different disease states to better serve members' with chronic and complex conditions. Specialization allows pharmacists to fully engage Medco members with a greater understanding of their medical conditions, assist them with potential side effects from their treatments, and provide more comprehensive counsel to help ensure members are on the right medication, the right dose and are adhering to their treatment to ensure the best result.

"Medco believes in the importance of integrating the latest advancements in science and technology that are leading toward personalized medicine into the services it provides to clients and members," Klepper said. "We can no longer take a broad-brush approach to pharmacy.

The Medco Therapeutic Resource Centers are staffed with hundreds of pharmacists who receive specialized training in specific chronic conditions, such as cancer, diabetes, heart disease and asthma. This focuses the pharmacists' energy on improving patient health outcomes."

Medco's two existing automated dispensing pharmacies in Willingboro, N.J. and Las Vegas dispensed 90 percent of the company's mail-order prescriptions in 2006. Medco's automated pharmacies currently have the capacity to fill more than 2 million prescriptions per week. Medco opened the world's first fully automated pharmacy in Las Vegas in October 1996 and the world's then- largest pharmacy with 280,000 square feet in Willingboro in 2001.

Reflecting the company's innovations in the field of pharmacy benefit management, Medco holds 17 U.S. patents for patient data management, front-end pharmacy technology and automated pharmacy technology. Medco also has 35 domestic and international patents pending for the application of various technologies, 18 of which are for its automated pharmacies.

Thursday, November 29, 2007

Medco announces two-for-one stock split

Earlier today, Medco announced that its board of directors has approved a two-for-one stock split. The split, which will take effect on January 24, 2008, will entitle all shareholders of record to receive one additional share of Medco common stock for each share they hold as of the close of business on January 10, 2008. The stock price after the split will be exactly half of its closing price on January 24, 2008. The Company’s stock will begin trading on a split-adjusted basis on January 25, 2008.

Since becoming a public company in August 2003, Medco’s stock has appreciated approximately four-fold.

“By concentrating our resources on breakthrough innovations that deliver clinical and financial value to our clients and members, we have, in turn, delivered a consistent track record of building wealth for our shareholders,” said Dave Snow. “Following this strategy that leverages key growth drivers -- including generics, mail order, specialty pharmacy, and Medicare, and our success in driving net-new business -- we are confident that we will continue to grow shareholder value.”

The following are answers to several commonly asked questions regarding stock splits.

Q: What is a stock split?

A: A stock split is a change in the market capitalization of a public company that increases the number of securities outstanding. A split also adjusts the value of the securities accordingly, without any corresponding change in Medco’s assets or capital.

Q: Will Medco shares be less valuable after the split than before?

A: Each unit of a Medco security – whether a share of stock, a stock option or a restricted stock unit – will be valued after the split at exactly half of its closing price on Thursday, January 24, 2008. Holders of those securities, however, will own precisely twice as many of each security as they did before the split. Their holdings after the split will have the same value as they did before. For example, if you own 100 shares of stock and the market price is $10 per share, your total investment is $1,000. After the split, you will have 200 shares of stock, but the market price will be approximately $5 per share. Your total investment of $1,000 remains the same.

Q: Why did Medco’s board of directors approve a stock split now?

A: Medco’s stock has appreciated substantially since the company went public in August 2003. Medco’s board of directors decided to split the stock so that the shares become more affordable to a broader range of potential investors, and to increase liquidity in the trading of Medco shares.

Q: Will the split have an impact on my 401(k) account?

A: No. The value of your holdings in the Medco stock fund will not change.

Q: Will the split have an impact on Medco’s employee stock purchase plan?

A: No. The value of your holdings in Medco stock will not change, although you will own twice as many shares after the split as you did before.

Q: How will the split affect my options?

A: As a result of the split, holders of Medco options will receive one additional option for each one they own as of the close of business on January 24, 2008. After the split, each option’s grant price will be half of what it was before. For example, if an employee owns 10 options, each with a grant price of $50 (the price at which the employee can buy the underlying option once it has vested) before the split, he or she will own 20 options, each with a grant price of $25, afterwards. The value of that employee’s holdings will not change.

Before the split:

Number of options

Grant price

Share price

Total value

$50.00

$90.00

$90 - $50 = $40 per option;

$40 x 10 options = $400

After the split:

Number of options

Grant price

Share price

Total value

$25.00

$45.00

$45 - $25 = $20 per option;

$20 x 20 options = $400

Q: How will the split affect my restricted stock units (RSUs)?

A: Restricted stock units are always worth the value of one share of Medco common stock once vested. They will be treated during the split exactly as shares would be; those who hold a given number of RSUs as of the close of business on January 24, 2008 will hold exactly twice as many after the split, each valued at exactly half of the closing price of Medco stock on that day.

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By: Emily Stephenson, Staff Writer