CVS Caremark Corporation

CVS Caremark Corporation,NYSE: CVS is an integrated pharmacy services provider, combining one of the U.S.'s leading pharmaceutical services companies with the country’s largest pharmacy chain. The company manages more than one billion prescriptions per year, more than any other prescription benifet manager. CVS Caremark provides pharmacy services through its 6,200 CVS/pharmacy stores; its pharmacy benefit management, mail order and specialty pharmacy division, Caremark Pharmacy Services; its retail-based health clinic subsidiary, MinuteClinic; and its online pharmacy, CVS.com. CVS Caremark Corporation is chartered in Delaware, and is headquartered in Woonsocket, Rhode Island, where its pharmacy business is also headquartered. The pharmacy services business is headquartered in Nashville, Tennessee.

CVS Caremark has two operating segments: CVS/pharmacy and Caremark Pharmacy Services.

• CVS/pharmacy is the nation's largest retail pharmacy chain, with approximately 6,200 stores across 38 states. With more than 40 years in the retail pharmacy industry, CVS/pharmacy generates over 68% of its revenue from the pharmacy business. CVS/pharmacy fills more than one of every seven retail prescriptions in America, and one of every five in their own markets. Their ExtraCare program boasts over 50 million cardholders, making it the largest retail loyalty program in the country.

• Caremark Pharmacy Services, one of the nation's leading pharmacy benefit management (PBM) companies, provides comprehensive prescription benefit management services to over 2,000 health plans, including corporations, managed care organizations, insurance companies, unions and government entities. With net revenue of approximately $37 billion (including approximately $5.8 billion of retail copayments) in 2006, they are also one of the largest PBMs. Caremark operates a national retail pharmacy network with over 60,000 participating pharmacies, as well as 11 mail service pharmacies. Its call centers have been recognized for customer satisfaction excellence by J.D. Power & Associates. Caremark operates over 70 specialty pharmacies, and its specialty pharmacies have been accredited by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO). Its disease management programs through Accordant(R) have also been accredited by the National Committee for Quality Assurance.

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Name

The lineage of CVS Caremark Corporation can be traced back to Melville Corporation, formerly based in Rye, New York. Melville was a large retail holding corporation incorporated in 1922 as the Melville Shoe company. It changed its name to CVS Corporation in 1996. In March 2007, CVS Corporation completed the acquisition of Caremark Rx Inc. and changed its name to CVS Caremark Corporation.

• CVS

The CVS name once stood for Consumer Value Stores; though Tom Ryan, CVS Caremark's CEO, has said he now considers it to stand for "Convenience, Value, and Service". [2]

The "pharmacy" part of the CVS store name comes from the chain's days as a regional Northeastern U.S. chain. CVS operated many convenience store-type stores without pharmacies, and the "/pharmacy" would be used to indicate the stores that had pharmacies. CVS now no longer builds stores without pharmacies, and many of the "CVS" stores (stores without pharmacies) have been phased out, though a few remain in New England, New York, Washington, D.C., and shopping malls.

• Caremark

Caremark was established in 1979 as Home Health Care of America, & changed its name to Caremark in 1985. In 1987, Caremark was acquired by, then became a subsidiary of, Baxter International. In 1992, however, Baxter spun off Caremark as a public company. In 1996, Caremark then merged with MedPartners/Mullikin Inc., with the combined company being called MedPartners. In 1998, MedPartners changed its name to Caremark Rx. [3]

Acquisitions and growth

• The first CVS store, selling health and beauty products, is founded in Lowell, Mass. by brothers Stanley and Sidney Goldstein and partner Ralph Hoagland in 1963.

• In 1964, CVS has 17 stores that sell primarily health and beauty products.[4]

• In 1967, CVS begins operation of its first stores with pharmacy departments, opening locations in Warwick and Cumberland, R.I.

• In 1969, CVS is sold to Melville Corporation.

• By 1970, CVS operates 100 stores in New England and the Northeast.

• In 1972, CVS nearly doubles in size with its acquisition of 84 Clinton Drug and Discount Stores. The purchase introduced CVS to the Midwest with stores in Indiana.

• In 1977, CVS acquires the 36-store New Jersey-based Mack Drug chain.

• In 1980, CVS becomes the 15th largest pharmacy chain in the U.S. with 408 stores and $414 million in sales.

• In 1988, CVS celebrates its 25th anniversary, finishing the year with nearly 750 stores and sales of about $1.6 billion.

• Since 1990, CVS has been rapidly growing in order to become a national drug store chain.

• In 1990, CVS acquires 500-store Peoples Drug, which establishes the company in new mid-Atlantic markets including Washington, D.C., Pennsylvania, Maryland and Virginia. Peoples Drug stores were then converted into CVS stores.

• In 1994, CVS launches PharmaCare, a pharmacy benefit management (PBM) company providing a wide range of services to employers, managed care organizations, insurance companies, unions and government agencies.

• At the beginning of 1996, CVS was a division of Melville Corporation. During that year, Melville Corporation divested their other retail companies such as Linens 'N Things, KB Toys, and Marshalls. Following the divestment, Melville changed their name to CVS Corporation & traded on the New York Stock Exchange with the symbol "CVS".

• During 1997, when it had about 1,400 stores, CVS doubled its size by purchasing the much larger Revco drug stores, which had over 2,500 stores. Revco brought CVS into the Ohio Valley and Southeastern U.S.; previously CVS' footprint had not been south of Washington, D.C. CVS could afford such a large purchase because of its recent Melville divesture.

• Also in 1997, CVS ProCare is established as a specialty pharmacy subsidiary of CVS.

• In 1998, CVS acquired 207 stores from Arbor Drugs, bringing its store total to 4,100 across 24 states. The transaction gives CVS its first stores in Michigan and the instant lead in the highly competitive Detroit market.

• In 1999, CVS acquires Soma.com, the first online pharmacy, and renames it CVS.com to become the first fully-integrated online and brick-and-mortar pharmacy offering to consumers.

• In 2000 CVS acquires Stadtlander pharmacy, making CVS ProCare the largest specialty pharmacy in the U.S. at the time.

• CVS has also been expanding its store base through new store openings. CVS entered the Chicago market in 2001, which at the time was dominated by Walgreens. In 2004, it has entered the California market, which is currently dominated by Longs Drugs, Rite Aid, and Walgreens. In the last few years, it has also opened stores in Las Vegas, Nevada, Houston, Texas, and Dallas, Texas, right before its purchase of Eckerd. CVS has also begun to open stores in Arizona.

• In 2004, CVS purchased 1,268 Eckerd drug stores and Eckerd Health Services, Eckerd’s PBM/Mail-order pharmacy business, from J.C. Penney. Most of the former Eckerd stores that CVS purchased (and converted into CVS stores) were in Florida and Texas. Since JC Penney credit cards were accepted at Eckerd drugs stores, they have been continued to be used at CVS.

• Also in 2004, CVS ProCare becomes part of PharmaCare. All ProCare stores are re-branded as PharmaCare stores.

• On January 23, 2006, CVS announced that it had agreed to acquire the freestanding drug store operations of supermarket chain Albertsons. The deal included the acquisition of 700 drug stores trading under the Osco Drug and Sav-On Drugs banners, mostly in the Midwest and Southwestern United States with primary concentration of stores in Southern California and Chicagoland; and was formally completed on June 2, 2006. Transition of Sav-On and Osco stores to the CVS brand began shortly thereafter, and was completed by December 2006. CVS now dominates the Southern California market. Also included were Albertsons Health'n'Home (now CVS Home Health) durable medical equipment stores. Approximately 28 CVS Home Health locations are present in Arizona, California and the Kansas City area; representing CVS first venture into the specialized DME market.

CVS had previously operated stores in southern California and completely withdrew from the market in 1993. CVS sold virtually all of the locations to Sav-on Drugs then owner American Stores Company which operated the drug store division as American Drug Stores. Many of the stores in Southern California that CVS has acquired were formerly operated by CVS and most recently have operated as Sav-on Express stores. The Express name was used by Sav-on to help customers identify those stores that did not carry all lines of merchandise as compared to the larger traditional Sav-on Drugs location, hence the name Sav-on Express. As a result of the acquisition, the chain now operates over 6,200 stores in 43 states and the District of Columbia. [5]

• On July 13, 2006, CVS announced that it had entered into a definitive agreement to acquire Minneapolis-based MinuteClinic, the pioneer and largest provider of retail-based health clinics in the U.S. MinuteClinic operates as a wholly-owned subsidiary of CVS Corporation. MinuteClinic health care centers are staffed by board-certified nurse practitioners and physician assistants who are trained to diagnose, treat and provide prescriptions (when clinically appropriate) for common family illnesses such as strep throat and ear, eye, sinus, bladder and bronchial infections. MinuteClinic also offers common vaccinations, such as flu shots, tetanus, and Hepatitis A & B. The clinics are also supported by physicians who collaborate with the nurse practitioners to assure the highest quality of care. CVS plans to have 400 MinuteClinics by the end of 2007, most of which within CVS/pharmacy locations, and are targeting a total of about 2,500. [6]

• On March 22, 2007 CVS formally closes the acquisition of Nashville based Caremark Rx Inc., a pharmacy benefits manager. The company was renamed CVS Caremark Corp. and the corporate headquarters remained in Woonsocket, RI. The pharmacy services business, including the combined pharmacy benefits management (PBM), specialty pharmacy, and disease management businesses, is headquartered in Nashville, TN. Tom Ryan, the Chairman & CEO of CVS remained president and CEO of CVS Caremark Corporation, while Caremark's Edwin Crawford became the Chairman of the Board. On November 7, 2007 Edwin Crawford retired from his position, and Tom Ryan was again named Chairman of the Board.

Community Involvement

• The CVS Caremark Charitable Trust was established to provide funding for health care, education and community involvement initiatives in communities where CVS/pharmacy stores are located. [7]

• Since 1978, CVS Samaritan Vans have provided free roadside assistance to motorists and the community in numerous cities. They are “emergency response vehicles” that patrol select major freeways of Chicago, Charlotte, Cincinnati, Cleveland, Boston, Detroit, Indianapolis, Providence and Washington, D.C. in search of motorists in need. The drivers have a multitude of talents and certifications. They are Nationally Certified Auto Mechanics, State Certified Emergency Medical Technicians (EMTs) or Paramedics, and Nationally Certified Animal Control Officers. They are capable of making numerous on-site auto repairs, administering medical help, calming a tense situation or using their communication equipment to summon the state police or other assistance. Each year, the CVS Samaritan Vans travel about 600,000 miles, checking and assisting nearly 50,000 people, and responding to more than 61,000 roadway incidents.

• Played at the Rhode Island Country Club, the CVS Caremark Charity Classic was established to raise money for the support of non-profit agencies throughout New England. Since 1999, it has raised over $8 million for charity. The event has featured golf legends such as Arnold Palmer, Jack Nicklaus, Hale Irwin, and Gary Player along with today's top stars like David Duval, Chris DiMarco, Davis Love III, & Scott McCarron.[8]

Private label

CVS has an extensive assortment of various private labels and proprietary brands. In addition to CVS Brand, CVS also carries exclusive store brands under the names of Essence of Beauty, Gold Emblem, and Life Fitness. CVS also holds exclusive contracts to sell propriety brands such as Nuprin, Christophe, PreVentin-AT, Skin Effects, and the European brand Lumene. A new exclusive Playskool line of baby care is also in CVS stores. CVS was also first to sell single-use digital cameras and camcorders from Pure Digital.

Controversies

Elensys

In 1998, the Washington Post reported that CVS Corporation appeared to be sharing prescription drug information with the Woburn-based marketing company, Elensys. According to the Post, Elensys received information on specific prescription drugs that individual CVS customers had purchased and used this information to send targeted direct mailings urging customers to renew prescriptions and promoting other products in which they might be interested. CVS and Elensys argued that there were no privacy issues because Elensys was acting solely as a contractor to CVS, and because the purpose of the mailings was to educate consumers. CVS claimed that it never shared customers' medical histories with Elensys (despite the Washington Post's indirect evidence that they had). George D. Lundberg, editor of the Journal of the American Medical Association, called the practice "a gross invasion" of privacy. Following a firestorm of criticism and complaints by consumers, CVS discontinued the practice.

Boston prescriptions

During 2005 a rash of prescription mistakes came to light in some of CVS Corporation's Boston-area stores[9]. An investigation confirmed 62 errors or quality problems going back to 2002. In February 2006, the state Board of Pharmacy announced that the non-profit Institute of Safe Medication Practices (ISMP) would monitor all Massachusetts stores for the next two years. ^[1]

Health & Medicare Fraud

In the late 1980's & early 1990's Caremark RX Inc. had been involved in a number of health fraud and Medicare fraud scandals, documented with sources at [10][11]

References

1. ^ Christina Wallace, "CVS on notice after prescription errors", Metro International: Boston edition, 2006-02-10