CVS Corporation Statement Regarding AWP
WOONSOCKET, R.I., Oct 06, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- In response to an article appearing in today's Wall Street Journal regarding the recent settlement of a class action lawsuit involving First DataBank, Inc., Tom Ryan, Chairman, President and Chief Executive Officer of CVS Corporation (NYSE: CVS), made the following statement:
"There are multiple companies that provide average wholesale price (AWP) information to payers, the largest of which is First DataBank. Although we have not yet had time to review carefully the settlement agreement mentioned in today's Wall Street Journal, we understand that the agreement requires First DataBank to cease providing this information in two years. Under most commercial agreements, retail pharmacies are reimbursed for prescription drugs based on a formula designed to provide us with a reasonable return. That formula is based on the AWP for a particular drug minus a negotiated discount plus a negotiated dispensing fee. These negotiations occur on an ongoing basis. Over time, as AWPs have risen, the negotiated discounts have also widened. In the event AWPs were suddenly reduced in a material way for particular products, obviously we would renegotiate the discount or dispensing fee. Virtually all of our commercial agreements are 'at-will' agreements, which can be renegotiated freely."