WOONSOCKET, R.I — CVS Caremark on Friday said it has entered into an agreement to acquire the Medicare Part D business of Universal American for approximately $1.25 billion.
Universal American is a leading Medicare Prescription Drug Plan (PDP) sponsor based in Rye Brook, New York. The acquisition will more than double the size of CVS Caremark's Medicare Part D program. Universal American's Part D business currently serves approximately 1.9 million Medicare PDP members, while CVS Caremark serves approximately 1.2 million Medicare PDP members. This reflects current levels of membership and does not include 2011 auto assignment or the results of the Annual Enrollment Period, which ended on Dec. 31, 2010.
"Today's transaction furthers CVS Caremark's position as a significant player in one of the nation's fastest growing segments of the Pharmacy Benefit Management industry. A growing portion of the country's population will receive their prescription drug coverage under Medicare plans, driven both by age demographics and the anticipated shift of retirees from employer based coverage to Medicare that will likely result from health care reform," said Per Lofberg, President of Caremark Pharmacy Services, in a prepared statement.
Upon completion of the transaction, CVS Caremark will become one of the nation's largest providers of prescription drug services for Medicare beneficiaries enrolled in Medicare Part D.
Medicare Part D is the federally subsidized prescription benefit program provided to Medicare beneficiaries, citizens who are 65 years and older or who otherwise qualify through disability. Prescription drug coverage funded by Medicare is projected to be one of the fastest growing segments of the PBM market, given the nation's aging demographics and the growing trend to transition retiree coverage to Medicare funding.
The transaction is subject to customary closing conditions, including necessary regulatory approvals and is expected to close by the end of the second quarter.