CVS 2013 Annual Report Download - page 51

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2013 Annual Report
• The possibility of PBM client loss and/or the failure to win new PBM business, including as a result of failure to
win renewal of expiring contracts, contract termination rights that may permit clients to terminate a contract prior to
expiration and early or periodic renegotiation of pricing by clients prior to expiration of a contract.
• The possibility of loss of Medicare Part D business and/or failure to obtain new Medicare Part D business, whether
as a result of the annual Medicare Part D competitive bidding process or otherwise.
• Risks related to the frequency and rate of the introduction of generic drugs and brand name prescription products.
• Risks of declining gross margins in the PBM industry attributable to increased competitive pressures, increased
client demand for lower prices, enhanced service offerings and/or higher service levels and market dynamics and
regulatory changes that impact our ability to offer plan sponsors pricing that includes the use of retail “differential”
or “spread.”
• Regulatory changes, business changes and compliance requirements and restrictions that may be imposed by
Centers for Medicare and Medicaid Services (“CMS”), Office of Inspector General or other government agencies
relating to CVS Caremark’s participation in Medicare, Medicaid and other federal and state government-funded
programs, including sanctions and remedial actions that may be imposed by CMS on its Medicare Part D business.
• Risks and uncertainties related to the timing and scope of reimbursement from Medicare, Medicaid and other
government-funded programs, including the impact of sequestration, the impact of other federal budget, debt and
deficit negotiations and legislation that could delay or reduce reimbursement from such programs and the impact
of any closure, suspension or other changes affecting federal or state government funding or operations.
• Possible changes in industry pricing benchmarks used to establish pricing in many of our PBM client contracts,
pharmaceutical purchasing arrangements, retail network contracts, specialty payor agreements and other third
party payor contracts.
• An extremely competitive business environment, including the uncertain impact of increased consolidation in the
PBM industry, uncertainty concerning the ability of our retail pharmacy business to secure and maintain contractual
relationships with PBMs and other payors on acceptable terms, uncertainty concerning the ability of our PBM
business to secure and maintain competitive access, pricing and other contract terms from retail network pharmacies
in an environment where some PBM clients are willing to consider adopting narrow or more restricted retail
pharmacy networks.
• The Company’s ability to fully integrate and to realize the planned benefits associated with the acquisition of Coram
LLC in accordance with the expected timing.
• Risks relating to our ability to secure timely and sufficient access to the products we sell from our domestic and/or
international suppliers.
• Reform of the U.S. health care system, including ongoing implementation of the Patient Protection and Affordable
Care Act, continuing legislative efforts, regulatory changes and judicial interpretations impacting our health care
system and the possibility of shifting political and legislative priorities related to reform of the health care system
in the future.
• Risks relating to our failure to properly maintain our information technology systems, our information security
systems and our infrastructure to support our business and to protect the privacy and security of sensitive
customer and business information.