Express Scripts’ planned purchase of the pharmacy benefits management businesses of health insurer WellPoint may reinforce the notion that “bigger is better” when it comes to negotiating prescription drug prices.
The St. Louis-based company, the third largest PBM in the nation, stands to pass CVS Caremark and challenge Medco Health Solutions when it completes the acquisition of WellPoint’s NextRx subsidiaries later this year. More importantly, the deal would give Express Scripts more clout in negotiating better prices for existing employer customers and more aggressive pricing for prospective new ones.
The $4.675 billion deal, announced April 13, would fold Indianapolis-based WellPoint’s NextRx subsidiaries, which provide PBM services to roughly 25 million people in the United States and manage more than 265 million prescriptions each year, into Express Scripts’ network of integrated PBM services, including network-pharmacy claims processing, home delivery services, benefit-design consulting, drug use review, formulary management and medical and drug data analyses.
Analysts said the acquisition is a logical move in a field dominated by three PBM providers and several smaller ones, including health insurers like Aetna, Cigna and UnitedHealth, which have their own internal PBMs. The deal gives Express Scripts more clout in negotiating drug prices, in turn enabling employers to lower their copayments or reduce contributions they have to make to health plans.
The deal could boost Express Scripts’ business by 50 percent, from 500 million prescriptions filled each year to upwards to 750 million.
“That’s a huge amount of purchasing leverage that can benefit your entire book of business,” said Arthur Henderson, an analyst with Jefferies & Company, in an Associated Press interview.
Another analyst, Tony Perkins of First Analysis Securities Corp., lauded Express Scripts for helping to move patients from branded medications to less-expensive generic ones, helping both patients and employers.
“You save money and then your employer saves money because they’re not having to spend the amount that’s prestipulated for that branded medication,” Perkins said in an AP interview. “This (deal) really makes sense.”
"Now more than ever, as the nation focuses on healthcare reform, this collaboration between Express Scripts and WellPoint represents a shared commitment to achieving optimal health outcomes while driving out wasteful spending," said George Paz, chairman and CEO of Express Scripts. "As we apply our advanced understanding of consumer behavior to an additional 25 million members, and manage more than 750 million adjusted prescriptions annually, we will optimize the cross-selling of proven trend management tools such as generics, home delivery and specialty pharmacy."
"This transaction provides a unique and compelling opportunity to improve our integrated health benefits offerings to our members, while simultaneously delivering significant value to our shareholders," added Angela F. Braly, president and CEO of WellPoint.