At a Glance: Medco Health's contract losses

AP News
Posted: Jul 21, 2011 5:03 PM
At a Glance: Medco Health's contract losses

Medco Health Solutions Inc.'s planned acquisition by rival Express Scripts Inc. for $29.1 billion follows a number of contract losses for Medco, and the losses far outweigh the $800 million in new 2012 business Medco has signed so far.

Contracts not being renewed include:

_The Federal Employees Health Benefits Program, which provides health insurance to federal government employees, retirees, and their families. Under the contract, Medco received about $3 billion in annual revenue and handled around 9.8 million mail order prescriptions a year. The contract was awarded to CVS Caremark Corp., which already handled the program's retail pharmacy benefit. Medco said the current contract, which expires Dec. 31, brought in less than 10 percent of its annual profit.

_The California Public Employees' Retirement System, or CalPERS. Medco said the expiration of the contract won't have a significant effect on its results. One analyst estimated Medco received about $500 million in annual revenue from the deal. The contract ends Jan. 1, 2012.

_MemberHealth LLC and Bravo Health. MemberHealth LLC handles Medicare Part D benefits, and earlier this year it was sold to CVS Caremark Corp. by previous owner Universal American Corp. Bravo Health runs Medicare Advantage plans, and it was sold to health insurer HealthSpring Inc. in late 2010. The contracts expire at year's end.

_UnitedHealth Group Inc. The contract expires Dec. 31, 2012. Medco said Thursday that after several months of discussions, it was dropping the contract because the terms UnitedHealth wanted would have been bad for Medco shareholders.