Both Walgreens, Inc., the Nation's largest pharmacy chain (by sales), and Rite-Aid, the third largest chain, reported significant increases in quarterly profits this week. Both chains report that Walmart's $4 generic drug price has not dented their sales. Among other factors, Walgreens gives credit to the Medicare Part D program and Rite Aid give credit to higher profit margins on drugs like Zoloft which recently shifted from brand name to generic status when the manufacturer's patent protection expired.
Of course, the second largest chain, CVS, is seeking to acquire the Nation's largest prescription benefit manager (PBM) Caremark. Rite-Aid indicated that it has no such acquisition plans. Rite-Aid lost money when it acquired a national PBM, PCS, a company which is now part of Caremark.
On the Caremark acquisition front, two shareholder lawsuits brought by two different pension plans were filed against Caremark this week, alleging that Caremark's directors "breached their duty to shareholders in agreeing to a buyout by CVS Corp. The shareholders said the directors failed to give enough consideration to a higher, unsolicited bid by Express Scripts Inc." One lawsuit was filed in Nashville, TN, where Caremark is headquartered and the other in Wilmington, DE, as Caremark is a Delaware corporation. On Friday, a federal judge refused to enjoined the CVS deal on the ground that Caremark's directors plan to consider the Express Scripts offer after January 1.