Due to the below regulation and other government 'plans'
a cautious entry price is advised.
CVS 10-Q, June 30, 2009, p.25:
"In January 2009, the Centers for Medicare and Medicaid Services issued a regulation requiring that, beginning in 2010, any difference between the drug price charged to Medicare Part D plan sponsors by a PBM and the drug price paid by the PBM to the dispensing provider (commonly called “differential” or “spread”) be reported as an administrative cost rather than a drug cost of the plan sponsor for purposes of calculating certain government subsidy payments and the drug price to be charged to enrollees. These changes impact our ability to offer Medicare Part D plan sponsors pricing for 2010 that includes the use of retail network “differential” or “spread,” and we expect these changes
to reduce the profitability of our Medicare Part D business beginning in 2010."
CVS's Q4 2008 profits increased 17%, largely on customers buying more generic goods. CVS-brand goods, which are cheaper than name brand competing products, have higher profit margins for the company. As the recession continues, the company stands to benefit from more movement towards generic CVS brand sales.