PBM giants Express Scripts, Medco to merge
ST. LOUIS — Two of the country’s largest pharmacy benefit managers plan to merge in a deal worth $29.1 billion.
St. Louis-based Express Scripts and Franklin Lakes, N.J.-based Medco Health Solutions announced Thursday that their boards had voted unanimously to approve the merger, though the deal still is subject to regulatory review. The deal would create the country’s largest PBM, followed by CVS Caremark.
Under the agreement, Express Scripts will form a new holding company called Express Scripts Holding Co., and Medco shareholders will receive $28.80 and 0.81 shares of the new holding company for each Medco share they own, while Express Scripts shareholders will become shareholders of the new company and receive one share of it for each Express Scripts share they own. The $42.56 share price of the new company, combined with the $28.80, means Medco shareholders will receive $71.36 per share, representing a 28% premium over Medco’s stock price as of Wednesday.
Express Scripts shareholders will own 59% of the new company, while Medco shareholders will own the remaining 41%. The company will be headquartered in St. Louis, and Express Scripts CEO George Paz will serve as chairman and CEO. The board of directors will be expanded to include two of Medco’s board members. Bloomberg quoted an analyst as saying the combined company would control a 30% share of the market by 2013, while CVS Caremark would control a share in the low 20s, and UnitedHealth would be in the low teens. While Express Scripts and Medco expressed confidence that the merger would be approved by regulatory authorities, the analyst said it would be difficult for them to get it past the Federal Trade Commission.
“The cost and quality of health care is a great concern to all Americans; this is the right deal at the right time for the right reasons,” Express Scripts CEO George Paz said. “Companies like ours have a responsibility to provide the leadership and resources required to drive out waste in health care and provide the best care in the world. The merger with Medco will accelerate our efforts to create greater efficiencies in the healthcare system and better protect American families from the rising costs of prescription medicine while improving health outcomes.”
Forgoing daily aspirin regimen boosts heart attack risk, study finds
NEW YORK — A new study published in the July 19 online edition of BMJ found that heart disease patients that opt out of taking low-dose aspirin daily put themselves at a higher risk for heart attack.
According to data pooled from the U.K.’s Health Improvement Network database, among the more than 39,500 patients ages 50 to 84 years who discontinued their low-dose aspirin (75 to 300 mg/day) regimen during the average follow-up of three years, researchers recorded 876 heart attacks and 346 deaths from coronary heart disease. Compared with low-dose aspirin patients, those who recently had stopped taking aspirin had a significantly increased risk of nonfatal heart attack or death from coronary heart disease.
The researchers noted that nonadherence in patients was the most common reason for discontinuation of low-dose aspirin.
"The magnitude of this short term increase in risk after discontinuation is about the inverse of the benefit obtained with use of low dose aspirin treatment for secondary prevention," study authors concluded. "The implications of interrupting such treatment should be taken into account when managing the secondary prevention of cardiovascular events in primary care."
Walgreens reaches out to benefit consultants on healthcare value
DEERFIELD, Ill. — Walgreens on Wednesday directly appealed to benefit consultants with a letter apprising them of the chain’s withdrawal from Express Scripts’ pharmacy provider network, effective Jan. 1, 2012, and educating those consultants of the healthcare value that Walgreens still can deliver without Express Scripts.
The letter also makes a direct appeal to plan sponsors whose pharmacy benefit manager contracts soon will come up for renewal to either “select a PBM that includes Walgreens’ more than 7,700 pharmacies in their networks,” or perhaps consider “direct arrangements with plans currently using Express Scripts, to the extent permitted by their contracts.” The letter, a copy of which has been obtained by Drug Store News, included “a template agreement that can be used to implement such direct arrangements where permitted,” for consideration.
“We … wanted to remind you of the significant value Walgreens provides to plan sponsors and their members, as they consider their pharmacy benefit decisions,” Kermit Crawford, Walgreens president of pharmacy, health and wellness, wrote in the letter.
According to the letter, this includes:
Better generic performance. Walgreens helped Express Scripts clients drive greater penetration of generics — 73.9% during 2010 — which is 140 basis points better than the average of the Express Scripts retail network excluding Walgreens, based on Express Scripts’ own data. Walgreens consistently performs better in quickly driving generic utilization, reaching 80% generic utilization on new molecules more than four months faster on average than the industry average. This better generic performance translates to average savings of more than $2 per script, or $12 to $16 per member per year, which can save millions of dollars for plan sponsors in avoiding unnecessary branded drug costs;
More convenience and access. Walgreens offers the most retail pharmacies of any chain, including the most with 24-hour access, as well as drive-through pharmacies and a fully integrated online pharmacy with “scan your refill” options at all times and locations, and online pharmacy chat lines available to patients. Convenience and access translates into savings for plan sponsors by avoiding unnecessary emergency room and other hospital costs;
Competitive unit prices. Walgreens has highly competitive unit prices validated by external benchmarks. In fact, during the company’s recent acquisition of Duane Reade it found Walgreens offered significantly better unit prices;
Savings from chronic medication management. Walgreens offers superior programs that can help reduce not just pharmacy costs, but also medical costs, which is where the majority of the cost-savings opportunities exist. The Walgreens “Retail 90” program results in a 15 percentage point improvement in adherence to medications. In fact, Walgreens has the highest penetration of 90-day supply in the industry, at more than 20% of its adjusted scripts, whereas many pharmacies do not even have a 90-day offering. 90-day retail results in lower costs and savings for plan sponsors, often at unit rates that end up costing plan sponsors less than mail programs. Walgreens find these cost savings programs are often not adequately promoted by Express Scripts to plan sponsors; and
Broader healthcare value. Walgreens has the largest in-store immunization program, with more than 26,000 pharmacists who are certified immunizers. In fact, Walgreens is the second-largest provider of flu shots in the country, second only to the U.S. government. Walgreens also has more than 700 Take Care Clinics and worksite health-and-wellness centers providing easy, affordable access to health care. Many of these are in communities that are medically underserved.
“Plan sponsors whose pharmacy benefit management contracts are currently up for renewal may wish to select a PBM that includes Walgreens’ over 7,700 pharmacies in their networks,” Crawford added. “We also would be pleased to discuss direct arrangements with plans currently using Express Scripts, to the extent permitted by their contracts. We have attached for your consideration a template agreement that can be used to implement such direct arrangements where permitted.”