Print

Express Scripts, Medco tie-up cements cost-cutting trends

Date July 22, 2011

The proposed combination of two of the biggest bulk drug buyers in the US, Express Scripts and Medco Health Solutions, ought to be of concern to anybody selling pharmaceuticals. Though lacking the sales and the vertical structure that resulted from the 2007 acquisition of Caremark by CVS, the latest transaction, should it be allowed, will create a pharmacy-benefits manager (PBM) with the biggest share of covered lives in America, giving it significantly greater leverage in pricing negotiations.

Consolidation in response to competition and cost pressure is an ever-present trend in health care, of which the Express Scripts-Medco tieup is an expression. Whilst executives of the firms tried to sell it as a good-for-the-nation transaction to bring consumers cheaper drugs, it looks more like a hard-headed business decision. The question pharma companies of all sizes must be asking: How effective will the combined company be at commanding lower prices?

This content is written, edited and published by EP Vantage and is distributed by Evaluate Ltd. All queries regarding the content should be directed to: news@epvantage.com

EP Vantage is a unique, forward-looking, news analysis service tailored to the needs of pharma and finance professionals. EP Vantage focuses on the events that will define the future of companies, products and therapy areas, with detailed financial analysis of events in real-time, including regulatory decisions, product approvals, licensing deals, patent decisions, M&A.

Drawing on Evaluate, an industry-leading database of actual and forecast product sales and financials, EP Vantage gives readers the insight to make value-enhancing decisions.

EP Vantage SM ©2014 EP Vantage Ltd