Health Net, Inc. subsidiary Health Net Life Insurance Co. announced it has agreed to sell its Medicare stand-alone prescription drug plan (PDP) business to a subsidiary of CVS Caremark for $160 million.
Health Net has about 400,000 members enrolled in its PDP plans in 49 states and the District of Columbia, with annual sales of $490 million. While it is selling its PDP business, Health Net still intends to provide prescription drug coverage to members via its Medicare Advantage Plan business.
"We believe this proposed transaction is in the best interests of our Medicare PDP members and our stockholders," said Jay Gellert, president and chief executive officer of Health Net. "Our Medicare PDP members, who have received certain services from CVS Caremark for five years, will now be affiliated with one of the nation's largest Medicare PDP sponsors."
For CVS CareMark, the deal comes as the operator of both pharmacy benefits plans and more than 7,300 retail locations looks to build its PDP business. In April it closed its $1.25 billion acquisition of Medicare Part D company Universal American, a move that added 1.9 Part D members and more than doubled the company's Part D membership to 3.1 million. As a result, CVS Caremark is now one of the largest providers of prescription drug service to Medicare beneficiaries enrolled in Medicare Part D.
Last October, it also announced a partnership with health insurer Aetna to offer a co-branded Medicare prescription drug plan in 43 states and the District of Columbia.
The latest transaction with Health Net is expected to close in the second quarter this year, pending customary closing conditions and regulatory approvals, including approval from the Centers for Medicare & Medicaid.