MHS Medcohealth Solutions Common Stock

The leading provider of prescriptions and related health care services in the US, CVS Caremark Corporation (CVS) along with researchers from Harvard and Brigham universities and Women's Hospital recently stated that the extensive use of generic medicines for the treatment of chronic diseases is a cost-effective preventative health care option.

A recent study in this regard shows that the use of low-cost generic drugs compared to branded medications will curtail treatment expenses considerably. A study conducted in 2008 found that the cost of treating a cardiovascular disease using branded medications was $83,327 per quality adjusted life year (QALY). However, the study conducted by the research team demonstrated that the same treatment using generics is merely $17,084 per QALY, or just 20% of the previous estimate.

In an era when health care reimbursement coverage is of the utmost priority to minimize the burdensome costs of treatment, CVS believes this study will provide a major relief to the citizens as well as the government, which spends more than 70% of health care costs in the US (80 million cardiovascular disease patients with annual costs of $475 billion) in treating patients with one or more chronic diseases. This research on generic medications is expected to change the economics of treatment in the US.

CVS is confident of driving significant revenues in 2012 based on the huge potential of generic drugs. The number of branded drugs expected to go off-patent in 2012 will more than double the revenues of CVS. We are also confident about further progress in the PBM segment based on CVS’ new business wins and strong client retention.

During the first quarter, the company won $8.9 billion in net new business and has already completed more than 90% of its 2011 renewals. It maintained its retention level at 97%. CVS recently beat its arch rival in the PBM segment, MedcoHealth Solutions (MHS) in receiving the highly-valued FEP contract for three years. Presently we remain ‘Neutral’ on CVS.

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