CVS Caremark’s first-quarter net income jumped 23 percent to top Wall Street’s expectations, as generic drugs continued to improve profitability even though those prescriptions hurt revenue.
Generic drugs, which are cheaper, copycat versions of brand-name medicines, help a drugstore’s bottom line because they provide a wider margin between the cost for the pharmacy to purchase the drugs and the reimbursement received. But they hurt stores’ revenue because generics cost less than brand-name drugs.
Drugstores and pharmacy benefits managers, which run prescription drug plans for employers and other customers, have reaped gains for several quarters now from a wave of patent expirations that have hit top-selling drugs.