For serveral weeks the odd rumor that PBM Caremark was going to buy AdvancePCS showed up in the Yahoo ADVP message board. While you shouldn’t usually trust what those boards say, this time they were right. Caremark announced a roughly $5 billion agreed bid for AdvancePCS, which sent Advance stock up from $40 to $47 and Caremark’s down from $24 to $22.  On the face of it, with a newly freed Medco the big gorilla in the marketplace, this is a decent consolidation move. Caremark is stronger in mail-order and more profitable, AdvancePCS has more lives, especialy in the health plan world, and has probably made a little more progress in the eHealth and DSM world. However, the price thay are paying is some 35% higher than AdvancePCS has ever traded on the open market, which is quite a premium — hence the decline in Caremark’s stock. Longer term it leaves three big PBM players for whatever role for PBMs comes out of the Medicare Rx bill, now in negotiations between the house and the Senate.