Independent Pharmacies Play an Integral Role in Helping CVS Caremark Members Access Medications

CVS Caremark considers independently-owned pharmacies to be important partners in creating the networks we offer our pharmacy benefit management (PBM) clients to ensure their members have convenient access to their medications. Independent pharmacies account for about 40 percent our network of more than 68,000 pharmacies across the country. Further, over the past five years, the number of independent pharmacies participating in our network has grown by more than 2,000 locations, while the number of chain pharmacies has stayed relatively flat.

We reimburse the pharmacies in our network fairly and, overall, independent pharmacies are reimbursed today at a higher rate than larger regional and national chains. In addition, we are working to introduce a new reimbursement model for independent pharmacies that would provide them with generic reimbursement predictability while still providing a cost-effective benefit for our clients. At the same time, our reimbursement is designed to incentivize pharmacies to negotiate competitive acquisition costs in order to help manage costs for patients, payors and taxpayers. Our priority must be on providing a cost-effective benefit for our clients and the patients they support.

Despite the perception that some independent pharmacies want to create publicly, it is important to understand that the independent pharmacy industry is a significant competitor. All told they are an $88 billion industry, representing one-third of the total pharmacy market. Over the past five years, revenues for independent pharmacies have increased 35 percent and their overall profit margins have ranged from 22 to 24 percent in the past 10 years. In addition, most independent pharmacies belong to organizations that collectively negotiate reimbursements and discounts, including price adjustments after they invoice, with manufacturers and PBMs, which allow them to exert a significant competitive force in the market.