CVS 2009 Annual Report Download - page 22

We recently sat down with CVS Caremark executives Per Lofberg and
Larry Merlo to ask them some of the questions that have been on the minds
of investors. Below are excerpts where they discuss the state of the
PBM business, prospects for continued retail growth, and our integrated
approach to pharmacy care.
Q&A with Per Lofberg and Larry Merlo
QUESTION: Per, you joined CVS Caremark in January 2010.
What prompted your decision to make the move?
PER LOFBERG: Truth be told, it wasn’t a hard decision
to make. Caremark has been one of the leaders in the
PBM space for a long time now, and today CVS Caremark
has the most innovative offering. I think the integrated
PBM/retail approach will prove to be the winning model,
and I couldn’t resist the opportunity to help shape the
future of pharmacy care.
QUESTION: What have you been focusing on in these first
few months?
PER LOFBERG: The majority of my efforts have been
centered on achieving a successful 2011 selling season
and on future innovation. Fortunately, I inherited a PBM
business that was executing well when I got here. Our
isolated service issues were already resolved. Caremark
hadn’t won as much business for 2010 as hoped for,
but that was primarily a messaging issue. We’ve got
great technology, an executive team with an impressive
depth of experience, and a long-standing reputation for
outstanding customer service.
QUESTION: What are your key messages for prospective
clients?
PER LOFBERG: We’ve been emphasizing our industry-
leading strengths as a PBM, our ability to offer lower
prices through scale and efficiency, and our superior
core clinical capabilities. Obviously, our integrated
retail offerings can help lower costs further and improve
the plan member experience, so that is also part of
the discussion.
QUESTION: You’re talking about services such as
Maintenance Choice?
PER LOFBERG: That’s certainly one offering that we think
is pretty compelling. Clients can reap substantial savings
by driving additional utilization of 90-day prescriptions,
and they can still achieve the same or better generic
dispensing rates and levels of adherence. Their plan
members also like the option of picking up their 90-day
prescriptions at one of our stores. For some people it’s
just more convenient, and they also appreciate face-to-
face interaction with a pharmacist. It’s more than just
Maintenance Choice, though. It’s our ability to provide
specialty drugs at retail or to incorporate MinuteClinic
into our disease management offerings. For example,
in certain locations a diabetic can now walk into
MinuteClinic for his or her A1c test. That level of access
will have a positive impact on patient outcomes.
QUESTION: Let’s talk about retail. Larry, your side of the
business posted great numbers again in 2009, with same-
store sales gains that led all pharmacy retailers. How can
you maintain this level of growth?
LARRY MERLO: There are so many aspects of the retail
business working well, but I’ll mention just a few. We’ve
invested in technology that will drive greater efficiencies
in the pharmacy; we’re leveraging the ExtraCare card to
target customers more effectively; we’re taking share from
competitors; and we’re very aggressive in executing our
private-label strategy. In California and Hawaii, we’ve only
just begun to reap the rewards of the Longs acquisition.
Through the introduction of our best practices, we’re
going to make those stores much more profitable.
CVS Caremark
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