Head of Nation's Leading Drug Store Chain Calls for Safe, Legal Drug Importation

Head of Nation's Leading Drug Store Chain Calls for Safe, Legal
Drug Importation
CVS/pharmacy CEO Tom Ryan says global pricing system needed to help alleviate
costs for Americans 


WASHINGTON, May 5  /PRNewswire-FirstCall/ -- In testimony today before the
Department of Health and Human Services Drug Importation Task Force,
CVS/pharmacy Chairman, President and CEO Tom Ryan called on Congress and the
Administration to quickly establish a means for consumers to legally and safely
import prescription drugs.  To do otherwise, he said, would be to ignore the
millions of Americans who are forced to go outside the existing prescription
drug system in the U.S., which is intended to ensure drug safety, because they
cannot afford to buy drugs within the system.

"While many in our industry believe that importation is a fundamentally flawed
concept and oppose it without exception, I have come to a slightly different
view," Ryan said.  "Simply put, there are too many patients our pharmacists
never see because they cannot afford the drugs we dispense, and others who are
unable to pay for a full regimen of medications because it soaks up so much of
their disposable income."

For those reasons, Ryan said he supports a safe, legal system of importation
that would include the bulk importation of medicines from Canada as well as
other nations where safety and quality measures are similar to those in the
United States and dispensed by licensed U.S. pharmacies.

Ryan added that if such a system were put in place, CVS/pharmacy would commit
to playing an active role in providing access to imported drugs to consumers
who need them.

Despite his support for importation, Ryan said he believes it should be viewed
only as a temporary solution.  In order to truly address the problem of
skyrocketing drug costs for Americans, the existing global pricing model, under
which identical drugs to those sold in the U.S. often cost far less in other
countries due to government price controls.  "The existing underlying global
pricing model simply cannot be sustained," said Ryan.

The CVS/pharmacy CEO said that the federal government and pharmaceutical
companies must move the industry to a global pricing system that is fair across
all countries and that is based on what the market is able to bear and the
value delivered by the products.  "The United States cannot bear the cost of
R&D for the world," said Ryan.  "International trade negotiations are one place
where the U.S. can begin to lead the way to establishing a more appropriate,
market-based pricing system with our trading partners.  In the longer-term, the
answer must be fair and equitable trade practices and open access.  We cannot
allow millions of our fellow citizens to go without life sustaining medications
due to arbitrary international trade practices.  We don't do it for sugar, rice
or corn; we shouldn't do it for life saving medications."

"It is a complicated problem with neither simple explanations nor simple
solutions," Ryan continued.  "But this much is clear: No industry can
permanently sustain a pricing system in which the cost of a product varies so
radically from one country to the next, and pharmaceuticals are no exception."

With over 40 years of dynamic growth in the retail pharmacy industry, CVS is
committed to being the easiest pharmacy retailer for customers to use. With
4,187 stores in 32 states and the District of Columbia, CVS has created
innovative approaches to serve the healthcare needs of all its customers
through its online pharmacy, CVS.com and its pharmacy benefit management and
specialty pharmacy subsidiary, PharmaCare Management Services.

On April 5, 2004, CVS entered into a definitive agreement under which it will
acquire 1,260 Eckerd drug stores, located mainly in the southern United States,
in addition to Eckerd Health Services, which includes Eckerd's mail order and
pharmacy benefit management businesses.  The transaction is subject to review
under the Hart-Scott Rodino Act as well as other customary closing conditions,
and is expected to close in June of 2004.  General information about CVS is
available through the Investor Relations portion of the Company's website, at
http://investor.cvs.com/.

  Remarks by:
   Tom Ryan
   Chairman, President and CEO - CVS Corporation
   HHS Drug Importation Listening Session
   May 5, 2004



Mr. Chairman and members of the Task Force, on behalf of CVS/pharmacy, I am
pleased to be speaking with you today to share our views on the importation of
prescription drugs.

By way of background, I am Chairman, President and CEO of CVS Pharmacy. After
completing our recently announced acquisition of part of the Eckerd drugstore
chain, CVS/pharmacy will become the largest retail drug operator in the United
States, with more than 5,000 retail outlets in 36 states, filling over 400
million prescriptions per year (which is equal to 13% of all prescriptions
dispensed in the U.S.)  In addition, our Pharmacy Benefits Management company,
PharmaCare, will become the fourth largest, serving over 30 million lives.

While many in our industry believe that importation is a fundamentally flawed
concept and oppose it without exception, I have come to a slightly different
view.

It's indisputable that modern pharmaceuticals are tremendously valuable.
Innovative drugs save lives and improve the quality of life for countless
people around the world.  However, there are patients our pharmacists never see
because they cannot afford the drugs we dispense, and others who are unable to
pay for a full regimen of medications because it soaks up so much of their
disposable income.

Over the last few years there has been some progress in reducing the financial
burden faced by many of those in the greatest need, including retailer /
manufacturer / and state-sponsored discount programs and, most recently, the
just-launched Medicare discount cards.  While these are helpful, they do not
treat the underlying condition; they only relieve some of the symptoms.

That condition is the way pharmaceutical prices are set around the world. As
you know, identical drugs to those sold in the U.S. often cost far less in
other countries due to government price controls.  As a result, a multi-
billion-dollar industry, operating outside U.S. law and federal regulation, has
emerged to facilitate the flow of prescription drugs from Canada, and other
countries, into the U.S.

I applaud the efforts of this Task Force to address this important health care
issue.  Much of the discussion and debate has focused on the risks to patient
safety, such as the dangers associated with counterfeit drugs and the inability
to consult with a licensed pharmacist, weighed against the value of access to
prescription drugs for consumers who cannot afford them at current U.S. prices.
 Safety and accessibility are important questions, but these arguments miss the
core issue.  "The existing underlying global pricing model simply cannot be
sustained."

Let me be clear: I am not advocating that price controls are the solution. It's
a fact that a Ford Taurus, Dell laptop and bottle of non-prescription Tylenol
all cost more in the U.S. than in Canada.  That's the market working, not
arbitrary government price controls.

Global pricing is a complex problem with neither simple explanations nor simple
solutions.  But this much is clear: No industry can permanently sustain a
pricing system in which the cost of a product arbitrarily varies so radically
from one country to the next, and pharmaceuticals are no exception.

We must find a common ground.  I put forth two basic principles that might help
move the dialogue forward:

First, the federal government and pharmaceutical companies must move this
industry to a global pricing system that is fair across all countries.  The
United States can no longer bear the cost of R&D for the world.  Trade
negotiations are one place where the U.S. Trade Representative, among others,
can begin to lead the way to establishing a more appropriate, market-based
pricing system with our trading partners.  The recent U.S.-Australia Free Trade
Agreement is a notable advance on this front.  This Administration must elevate
pharmaceutical pricing issues to the forefront of international trade
negotiations.

Fixing the disparities in price that have evolved around the world will not be
a simple task, nor will it be quick.

This leads to my second principle -- while that process moves forward, the fact
remains that many Americans need help today with the cost of their prescription
drugs.  It is to serve this real need that CVS/pharmacy calls on the
Administration and Congress to quickly establish a means for consumers to
legally and safely access imported prescription drugs for a temporary period -
- perhaps 3 to 4 years, perhaps longer -- while a viable long-term solution is
pursued.  To do otherwise would be to ignore the millions of Americans who are
playing "Prescription Roulette" as we speak, forced to go outside our existing
system, which is intended to ensure drug safety, in order to preserve their
pocketbook.  Today there are well over 100 internet pharmacies sending
medications into the U.S. from Canada alone.  In addition, as you heard this
morning, there are states and cities setting up programs to direct their
uninsured citizens to international pharmacies, or even to purchase products
directly for their employees.

Our concern at CVS/pharmacy is for our customers and the trust they place in
our pharmacists.  Mr. Chairman, I believe that if CVS tried to import drugs to
meet our customers' needs, Federal and state authorities would shut us down
within an hour.  It is not acceptable to allow this trade to continue in the
shadows.

I recognize that there are many issues that require resolution before
importation can be temporarily permitted.  These include: deciding which drugs
to import given the lack of uniform international standards, ensuring adequate
product supply, and determining how to protect intellectual property rights, to
name just a few.  Also, in a program of this kind, we need to prioritize
providing relief to uninsured individuals -- making imports available to any
and all payers would strain supplies to the point where cost savings would
disappear.

Opening up our domestic drug distribution system to additional sources of
products undoubtedly increases the potential for counterfeit and/or adulterated
products to enter the system.  Therefore, I believe that the lowest risk
approach would be bulk importation: sourced from approved foreign entities,
imported by established domestic distributors, and dispensed by licensed U.S.
pharmacies.  Such a system should include requirements for clear drug pedigree
and chain of custody, the use of appropriate anti-counterfeiting technologies,
and adequate fees charged to exporters to offset the additional cost of federal
inspections and oversight.

In contrast, legalizing direct importation by consumers would involve millions
of packages from hundreds of sources; the resources needed to ensure safety in
that model would be massive compared to adding some safeguards to the safe,
well-established distribution system already in place in the U.S. Clearly, the
most logical path would be to leverage the drug distribution system we already
have in place today.

To conclude, we all know this is not an academic exercise - millions of
Americans already have opted to import drugs because they can't afford not to.
We owe it them to face this issue head-on and not look the other way.  If
importation is made legal and safe, CVS/pharmacy, as the nation's leading
pharmacy chain, is committed to playing an active role in providing access to
imported drugs to American consumers who need them.

In the longer-term, the answer must be fair and equitable trade practices and
open access.  We cannot allow millions of our fellow citizens to go without
life sustaining medications due to arbitrary international trade practices.  We
don't do it for sugar, rice, or corn; we shouldn't do it for life saving
medications.

I would be pleased to answer any questions the Task Force has for me.

Thank you. 

DATASOURCE: CVS/pharmacy



CONTACT:  Todd Andrews, Director of Corporate Communications of CVS

Corporation, [phone]



Web site:  http://www.cvs.com/

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