* Q4 revenue rises 11.7 pct to $45.97 bln vs. est. $46.50
* Q4 earnings $1.71 per share vs. est. $1.67 per share
* We are believers in the PBM model - Leerink analyst
(Adds conference call details, analyst comment, updates shares)
By Ankur Banerjee
Feb 9 Drugstore chain and pharmacy benefits
manager CVS Health Corp defended the industry on
Thursday, saying any suggestion that PBMs are causing drug
prices to rise was "simply erroneous".
Drug pricing has become a hot topic of discussion among
lawmakers in the past few years with several drugmakers under
federal investigations, and pharma supply chain members, such as
PBMs are also facing the backlash.
CVS's growth in recent quarters has been fueled by strong
demand for its PBM and specialty pharmacy businesses, which
provide drugs to people with expensive chronic conditions like
"We are the solution and not the problem," CVS's Chief
Executive Larry Merlo said, noting that numerous evaluations
from government agencies have concluded that PBMs drive real
savings to the healthcare sector.
PBMs negotiate drug benefits for health insurance plans and
employers, and have in recent years taken an increasingly
aggressive stance in price negotiations with drugmakers.
They often extract discounts and after-market rebates from
drugmakers in exchange for including their medicines in PBM
formularies with low co-payments.
Merlo added both public and private health insurers continue
to count on PBMs as "indispensable partners" that help manage
their drug trends.
Shares of the No. 2 U.S. drugstore chain by store count,
which posted lower-than-expected fourth-quarter revenue, fell as
much as 2.34 percent to $75.23 in midday trade.
We are believers in the PBM model, and CVS and Express
Scripts Holding Co both work to improve overall drug
trends, Leerink analyst David Larsen said in a client note.
Express Scripts, the largest PBM in the United States, will
report its quarterly results next week.
"Without the increased competition among manufacturers that
the PBMs create, drug price inflation would be even higher than
where it is now," Larsen added.
CVS, which confirmed its earnings and cash flow forecast for
the full year and first quarter of 2017, lowered its full year
PBM unit revenue growth forecast to 7.5-9.5 percent from
Management indicated that branded drug price increases were
lower than anticipated, driving some of the revisions, Larsen
Excluding items, the company earned $1.71 per share in the
quarter ended Dec. 31, beating analysts' average estimate of
$1.67, according to Thomson Reuters I/B/E/S.
Revenue rose 11.7 percent to $45.97 billion, but was below
analysts' average estimate of $46.50 billion.
(Reporting by Ankur Banerjee in Bengaluru; Editing by Martina