No Labor of Love at Medco

Medco announced a slew of new business when releasing its latest quarterly results. Notably, Medco signed on $2.4 billion worth of new commercial business -- up from $700 million during the company's last update -- for 2006. Much of that new business came from existing clients who have expanded through acquisitions. But another $4.7 billion worth of contract renewals, including a giant Blue Cross deal, came on top of that.

Wachovia analyst Matthew Perry, among others, seemed to marvel at those results.

"Can you talk about the competitive environment?" he asked. "Because it seems like you guys are winning more business than some of the other large PBMs."

Despite reports to the contrary -- with big employers seeking alternatives to traditional PBMs -- Snow himself reported no major changes from a year ago. Even now, he said, the big PBMs continue to land most of the industry's business. However, he added, Medco has "been fortunate" to win more state contracts than most.

But looking ahead, union officials have suggested, Medco's good fortune could run out. On Friday morning, Hammond was preparing for a meeting with the union president designed to push Medco clients into canceling their contracts with the company. After that, Hammond said, the union will begin negotiating on behalf of 500 Medco employees in Tampa Bay on Monday, and another 800 Medco employees in Columbus before the month comes to an end.

All of those employees, he said, will be seeking the same guarantees that have been denied by Medco in Las Vegas.

"We will not waive our rights to bargain" for health care benefits, he insisted. "This could have a major impact (on operations). These are three major facilities for Medco. Let's see if they lock out these other employees, too."

For its part, Medco has painted a prettier picture. For starters, the company claims that only 10% of its "direct contracts" are with unionized organizations. Moreover, it says that it has "reached out (and) talked to all of them."

Thus, the company foresees no major threats ahead.

"Clearly, the union is putting very inaccurate facts out there," Snow said on Friday. But "I'm still fairly optimistic that we will get (everything) resolved."