If we can keep our competitors focused on us while we stay focused on the customer, ultimately we’ll turn out all right.”
— Jeff Bezos, founder and CEO of amazon.com
Do you think that quote was in the back of the minds of ExpressScripts leadership when they sealed their company’s $29.1 billion acquisition of Medco Health Solutions? Overnight, ExpressScripts cemented its place as the largest PBM in the country, followed by CVS Caremark, a similar acquisition that occurred in 2007.
In April 2012, with the signatures still wet on the paperwork, there was great speculation about what the deal would mean to health plans and payers that need access to prescription medications, including biologics and other specialty drugs.
With spending on specialty medications constantly increasing, they were hopeful that through the large PBMs, with their volume-purchasing capabilities, they would see better pricing.
Mergers and Acquistions
However, some experts anticipated that market clout and sole-source distribution agreements would spell a different outcome, and plans and payers would have limited options and would have to do business with the big guys under whatever contractual agreement they could successfully negotiate. There was also some speculation as to whether other mergers and acquisitions would follow suit.
At the time, Russell Gay, executive director of the Independent Specialty Pharmacy Coalition say, “If I’m a health plan, I don’t have a lot of competitive leverage, so I’ll probably end up spending more on biologics and specialty pharmacy because I may get locked into an exclusive agreement.”
The acquisition did not necessarily give Express Scripts the long-term competitive edge and financial boost it was looking for. True, it became the largest PBM by combining two of the three largest PBMs at the time, and remains so today.
However, it lost one of its biggest plans, UnitedHealth Group, Inc., which began bringing its PBM services in-house, and buying Catamaran Rx in 2015 and merging it into its OptumRx unit.
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