Megadeal Unites Drug Rivals

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Anna Wilde Mathews and Jonathan Rockoff authored Megadeal Unites Drug Rivals in a published WSJ.com article of July 22, 2011. The article addresses the merger of two pharmacy benefits companies, Express Scripts Inc. and Medco Health Solutions Inc., along with the merger’s ramifications on the health care industry. This strategic merger is expected to impact the pharmacy benefit manager (PBM) market in conjunction with influencing drug costs and channels and possibly raising anti-trust concerns. The main characters in this article include the merging PBM companies Express Scripts Inc. and Medco Health Solutions Inc. Their PBM competitor companies include UnitedHealth Group Inc. with its OptumRx pharmacy unit, Walgreen Co., and CVS Caremark Corp. These PBM companies compete against each other for contracts with employers and health plans. Thomas Gryta defines Pharmacy Benefit Managers as companies who “process prescriptions for the groups that pay for drugs, usually insurance companies or corporations, and use their size to negotiate with drug makers and pharmacies.” (2011) Pharmacy Benefit Managers serve as liaison between the paying companies and the health care system’s variables. Their revenue comes from service fees of processing prescriptions, managing mail-order pharmacies, and negotiating reduced costs with drug companies. This consolidation, along with others in the health services industry, factors a drive to cut costs and thus, increase revenues. By combining purchasing power and control over a large percentage of the drug industry, PBM’s can negotiate reductions in drug costs for themselves and their consumers. They can procure less expensive generic drugs from generic manufacturers, negotiate rebates and disc... ... middle of paper ... ... benefits industry. Works Cited Gryta, T., (2011, July 21). What is a ‘Pharmacy Benefit Manager?’ Retrieved from http://online.wsj.com/article/SB10001424053111903554904576460322664055328.html#mjDropdown Kotler, P., & Keller, K. L. (2009). A framework for marketing management: Integrated with PharmaSim. Upper Saddle River, NJ: Pearson Prentice Hall. Mathews, A., & Rockoff, J., (2011, July 22). Megadeal unites drug rivals. Retrieved from http://online.wsj.com/article/SB10001424053111903554904576459924273283808.html National Community Pharmacists Association (2011). Pharmacists: proposed Express Scripts-Medco merger would reduce competition and raise health care costs. Alexandria, VA: author. Retrieved from http://www.ncpanet.org/index.php/news-releases/1053-pharmacists-proposed-express-scripts-medco-merger-would-reduce-competition-and-raise-health-care-costs

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