CVS buys Health Net’s Medicare PDP

One of the largest pharmacy benefits managers in the U.S. is about to get bigger. Health Net Inc. says it will sell its Medicare prescription drug plan (PDP) business to CVS Caremark Corp. (CVS) for about $160 million in cash.

Health Net has approximately 400,000 Medicare PDP members in 49 states and the District of Columbia. Its annualized revenue for the Medicare PDP business is approximately $490 million. The company will continue to provide prescription drug plans as part of its Medicare Advantage plan offerings.

In November 2010, Health Net was sanctioned by the Centers for Medicare & Medicaid Services (CMS) for lack of compliance with certain Part D requirements. The sanctions were lifted in August.

The acquisition, which requires approval from CMS, is expected to close in the second quarter.

For CVS, the deal comes on the heels of steady growth following the acquisition of the Medicare PDP business of Universal American Corp. in April 2011, which more than doubled its Medicare Part D business. Also, last fall, CVS announced a partnership with Aetna to offer a co-branded Medicare PDP in 43 states and the District of Columbia.
CVS runs more than 7,300 drugstores and is one of the largest pharmacy benefits managers in the U.S. According to analysts, expanding its Medicare Part D business is attractive to the company because more aging Americans are getting their prescription drug coverage from Medicare.

Go back to the Managed Healthcare Executive eNews newsletter.