CVS Caremark CEO Says Reducing Tax Rate Could Spur Investments in Jobs, Technology, Infrastructure; Help Lower U.S. Health Care Costs
WASHINGTON, D.C. July 27, 2011 -- The President and Chief Executive Officer of CVS Caremark Corporation, Larry Merlo, told a key Senate committee today that lowering the maximum corporate tax rate would allow the company to accelerate investments in U.S. jobs, technology, and infrastructure – all of which could ultimately help lower health care costs and strengthen the economy.
Merlo, who appeared before the Senate Finance Committee during a hearing regarding How the Tax Code Affects Hiring, Businesses and Economic Growth, said that the current U.S. tax structure puts companies that heavily reinvest their earnings in core domestic operations, like CVS Caremark, at a competitive disadvantage. Changes are needed to the U.S. tax structure to make the companies more competitive, he said.
"In order to continue to be successful in an increasingly global marketplace, CVS Caremark must control costs, raise capital and efficiently reinvest its earnings . . . our high effective tax rate not only limits the amount of earnings available to us for reinvestment in our core business, it also makes CVS Caremark less attractive to global investors," Merlo testified. “We are committed to growing our business in the U.S. Without a consequential rate reduction, tax considerations will have to be an even more significant component of our overall investment analysis.”
Merlo said CVS Caremark is committed to making significant future investments in service offerings, technology, employees and other improvements to the company’s infrastructure and operations. Those investments are geared towards lowering the overall cost of health care and improving consumer health, he noted. He said that a reduction in the corporate tax rate would allow the company to address larger health care issues.
“Our company currently reinvests approximately $2 billion back into our business each year and we are committed to making significant future investments in our service offerings, technology, training, drug adherence programs, retail clinics and other improvements. Our investments are geared towards lowering the overall cost of health care in this country and improving consumer health,” Merlo testified.
Today’s hearing was designed to solicit opinions regarding the nation’s corporate tax structure from American business leaders. Also testifying at the hearing were Michael Duke, President and Chief Executive Officer of Wal-Mart; Thomas Falk, Chairman and Chief Executive Officer of Kimberly-Clark Corporation and Gregory Lang, President and Chief Executive Officer of PMC-Sierra.
About CVS Caremark
CVS Caremark is the largest pharmacy health care provider in the United States with integrated offerings across the entire spectrum of pharmacy care. We are uniquely positioned to engage plan members in behaviors that improve their health and to lower overall health care costs for health plans, plan sponsors and their members. CVS Caremark is a market leader in mail order pharmacy, retail pharmacy, specialty pharmacy, and retail clinics, and is a leading provider of Medicare Part D Prescription Drug Plans. As one of the country's largest pharmacy benefits managers (PBMs), we provide access to a network of approximately 65,000 pharmacies, including more than 7,200 CVS/pharmacy® stores that provide unparalleled service and capabilities. Our clinical offerings include our signature Pharmacy AdvisorTM program as well as innovative generic step therapy and genetic benefit management programs that promote more cost effective and healthier behaviors and improve health care outcomes. General information about CVS Caremark is available through the Company's website at http://info.cvscaremark.com/.