Two of the country's largest independent infusion services providers recently unveiled that they have entered into a merger agreement. After coming together, BioScrip, Inc. and Option Care Enterprises, Inc. would be the No. 2 home/alternate site infusion provider in the United States, AIS Health reported.
Under the terms of the deal, publicly traded BioScrip would issue new shares to Madison Dearborn Partners, LLC and Walgreens Boots Alliance, Inc., which are the Option Care shareholders, giving them 80% of BioScrip's stock, with current BioScrip shareholders holding the remaining 20%. The new company would be publicly traded.
"Scale is critical to succeed in home infusion/alternate site services," says Bill Sullivan, principal consultant for Specialty Pharmacy Solutions LLC. "Opportunity to build scale…is important for payer access and better cost-of-goods pricing through wholesalers and in some cases direct with manufacturers."
"From the pharma side, I'm not going to say it's easy from a distribution standpoint, but with limited-distribution drugs…and an entity that covers 96% of the U.S. population, it's easy for a company to pick a partner like this," says Pat Clifford, managing director at The Braff Group.
"Considering that the home/site infusion industry has been growing at two to three times the rate of U.S. GDP [i.e., gross domestic product], we think it is no surprise that a national player would emerge eventually," remarks Bill Bolding, an analyst at Provident.
Benefits of the deal include the fact that "integrating patient care from outpatient through the home setting has the potential to improve outcomes significantly, all while minimizing the traditional waste/cost that comes with the patient transition," Bolding tells AIS Health.
While cost cutting is an additional benefit of the arrangement, it also may prove to be a challenge, says Clifford. "In markets with duplicate locations," they would be able to combine them, "but if they are overlapping a lot, some locations may need to be shut down."
Another potential challenge is the fact that "no individual player has controlled 10%-25% [of the] infusion market to date, depending on how you measure the space," says Bolding. "There is no playbook that this executive team can copy to merge site and home infusion at this scale, and as always, reimbursement risk should be considered."