Pharmacy and PBM acquisitions are occurring at a rate never perhaps seen before across the nation. Major purchases, investments, mergers and buyouts are making the headlines daily. Reviewing the top stories on Google just yesterday revealed some major “deals” in the pharmacy industry involving acquisitions, purchases and partnerships that were considered noteworthy by investment firms and stock market analysts. With skyrocketing healthcare and insurance costs a major concern in the US, most prominent healthcare companies claim that their acquisitions and mergers would benefit the public by resulting in cost savings to both consumers and health plan sponsors, but history suggests otherwise. The merger of UnitedHealth and Catamaran for an estimated $28 billion dollars a few years ago as an example certainly didn’t result in any lowering of the spiraling rise in healthcare spending. In fact, many experts agree that the result was actually a significant cost increase to patients.
Cigna Inc.’s Acquisition of Express Scripts
In what was a surprise move to many business analysts, Cigna acquired Express Scripts for an estimated $76 billion dollars. With Express Scripts having been the largest independent Pharmacy Benefit Manager (PBM), many see this as the possible end of the road in the US healthcare industry regarding the independent negotiation for prescription medication pricing. As we’ve previously discussed, PBM’s theoretically save their patients money on prescription drugs by volume buying and acting as the “middleman” between the insurance companies, the drug manufacturers and the estimated 266 million employees that the PBM’s have as members. As often discussed, the PBM’s are accused of the exact opposite effect – driving prescription drugs costs up and actually profiting from it.
What is transpiring is the the ownership and direct alliance of the following major players:
– CVS Health – Aetna
– Cigna – Express Scripts
– UnitedHealth – OptumRx
Interestingly enough, the acquisition resulted in an 8.6% rise in Express Scripts stock, while Cigna stock shares dramatically dropped by 11.5%.
Amazon Acquiring Diplomat Pharmacy, Inc?
Yesterday speculation was raised if Amazon was planning on purchasing Diplomat Pharmacy, Inc (DPLO). Diplomat is noted as the single largest independent pharmacy provider of specialty drugs in the nation. Known for providing extremely expensive specialty prescription medications for Hepatitis C, cancer, multiple sclerosis (MS) and HIV (human immunodeficiency virus), Diplomat also currently owns two PBM’s – Pharmaceutical Technologies Inc and LDI Integrated Pharmacy Services. The acquisition basically was seen by industry experts as turning Diplomat Pharmacy into a pharmacy benefits manager that specializes in offering the specialty drugs to their members. It must be noted that Amazon is not the only interested prospective buyer, with both Humana and Centene being seen as potential purchasers in acquiring Diplomat. DPLO’s stock has risen well over 10% recently.
Centene Corporation Invests In RxAdvance
Centene Corporation announced that it has entered into a “partnership” agreement with RxAdvance. In 2006 Centene purchased a pharmacy benefits manager (US Script) that it currently runs as Envolve Pharmacy Solutions. Already having over 12 million government employed members, Centene additionally administers several state Medicaid programs and is moving into the Medicare arena. Their management team stated that RxAdvance became extremely attractive to partner with because it is essentially a “cloud based” pharmacy benefits manager. Executives at Centene noted that the approcah would lead to an eventual disruptive change in the way that the PBM industry operates and does business. They further stated that the new partnership will result in improving the quality of healthcare and outcomes for their members and customers, while lowering healthcare costs.
Walgreens Purchases Pfaff Pharmacy
Although perhaps not really of the same magnitude as Express Scripts, Diplomat or Centene, Walgreen’s announced that it had purchased Pfaff Pharmacy in Grand Haven, Michigan earlier this week. The pharmacy was originally opened all the way back in 1923 as an independent retail community pharmacy, and it still had the “iconic” soda fountain associated with community pharmacies of the distant past. Hometown Pharmacy, based out of Newaygo, MI and operating 40 other pharmacies, had actually aquired Pfaff Pharmacy in 2013.
What’s of interest in this particular pharmacy sale and places the acquisition by Walgreen’s into the context of this discussion is the fact that the pharmacy’s revenue was greatly reduced due to the decision of the Michigan based health plan provider Priority Health that Pfaff Pharmacy would no longer be considered an “in-network” pharmacy. This basically meant that those patients under a healthcare plan provided by the insurer (including Michigan Medicaid and Medicare patients) could no longer get their prescriptions filled at Pfaff Pharmacy. In early December of 2017 Priority Health had taken steps that limited their network pharmacies in some communities and Pfaff was no longer considered an approved “in-network” pharmacy any longer.
HCC Has The Experience To Help You With An Exit Strategy
Having an exit strategy in place for a pharmacy business owner is critically important. If you are perhaps considering selling your pharmacy business in the future, or simply want to prepare and explore your options, HCC Pharmacy Staffing and Consulting can help. We offer you the support of our experienced in-house consulting team who have been through the process many times and know the business inside and out! With 28+ years of pharmacy consulting experience, HCC has helped hundreds of pharmacy business owners (pharmacists and non-pharmacists alike) get prepared by evaluating their business and exploring their possible exit strategy options. Contact us on line or call us today at 800-642-1652 for a Free Consultation to find out how we can help you too.