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
Merged businesses can decrease many of their expenses. Cropped marketing budget, lower material cost, redundant employee layoffs, merging the patient’s database lessens the overall business costs. Often, merged business adopts new and innovative technology which may seem costly, but technology actually
Being a giant in the insurance market in the United States, Aetna, Inc’s target market is widely spread and can’t be simply classified in primary and secondary targets. The company’s target market’s however, can be divided into two general markets with each having different classifications. Aetna’s target markets can be divided into an American market and an international one. Within the American market, Aetna divided itself into subsidiaries each concentrating on a specific target market. Outside of the American market, Aetna created Aetna International to specifically target various non-American markets.
Pharmaceutical benefit managers 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. This latest deal continues the consolidation trend but also highlights how the industry is becoming more than just an administrator and negotiator.
Shay, P. D., & Mick, S. S. (2013). Post-Acute Care and Vertical Integration After the Patient Protection and Affordable Care Act. Journal Of Healthcare Management, 58(1), 15-27.
A merger is a partial or total combination of two separate business firms and forming of a new one. There are predominantly two kinds of mergers: partial and complete. Partial merger usually involves the combination of joint ventures and inter-corporate stock purchases. Complete mergers are results in blending of identities and the creation of a single succeeding firm. (Hicks, 2012, p 491). Mergers in the healthcare sector, particularly horizontal hospital mergers wherein two or more hospitals merge into a single corporation, are increasing both in frequency and importance. (Gaughan, 2002). This paper is an attempt to study the impact of the merger of two competing healthcare organization and will also attempt to propose appropriate clinical and managerial interventions.
When one examines managed health care and the hospitals that provide the care, a degree of variation is found in the treatment and care of their patients. This variation can be between hospitals or even between physicians within a health care network. For managed care companies the variation may be beneficial. This may provide them with opportunities to save money when it comes to paying for their policy holder’s care, however this large variation may also be detrimental to the insurance company. This would fall into the category of management of utilization, if hospitals and managed care organizations can control treatment utilization, they can control premium costs for both themselves and their customers (Rodwin 1996). If health care organizations can implement prevention as a way to warrant good health with their consumers, insurance companies can also illuminate unnecessary health care. These are just a few examples of how the health care industry can help benefit their patients, but that does not mean every issue involving physician over utilization or quality of care is erased because there is a management mechanism set in place.
Health Maintenance Organizations, or HMO’s, are a very important part of the American health care system. Also referred to as managed care programs, HMO's are combinations of doctors and insurance companies that are formed into one organization. This organization provides treatment to its members at fixed costs and decides on what treatment, if any, will be given based on the patient's or doctor's current health plan. Sometimes, no treatment is given at all. HMO's main concerns are to control costs and supposedly provide the best possible treatment to their patients. But it seems to the naked eye that instead their main goal is to get more people enrolled so that they can maintain or raise current premiums paid by consumers using their service. For HMO's, profit comes first- not patients' lives.
Has anyone noticed that there seems to be a drugstore being built on every corner these days? Revco, Walgreens, and Rite Aid seem to be just a few of the drug store chains that are expanding. One has to wonder if this has anything to do with the possibility of including medicine under coverage by healthcare systems. This means that they may become part of a capitated payment system to the pharmaceutical providers. "By capitation, we mean a prospective payment to physicians or providers - either individually or as a group - of a fixed amount of money to care for each patient (Pearson, 1998)." In other words, every physician is provided a set sum of money whether they see any patients or not and every pharmacy would be given money whether they prescribe any drugs or not. Drug costs will rise.
Patients who struggle to pay for their medication, struggle with life. The Pharmaceutical Industry( Big Pharma) makes the important name brand drugs expensive, they are forcing people to take the medication, and they are also forcing them to refill the prescriptions even if they don’t need them; every pill counts! The cost of medication from 2009 to 2016 has increased by 400%. The Tactics of Big Pharma have been found to be wrong by many people and their own companies. Insurance companies are paying for patients’ over priced medications, sometimes the insurance doesn’t even cover it because it is so overpriced. The pharmaceutical company should start applying new drugs that are less expensive, than taking money for themselves. Big Pharma
...necessarily in a true or honest way. To illustrate this point, in 1995, 100% of all PBM’s profits came directly from their usual sales and business practices. Six years later, in 2001, the majority of their income came from services to pharmaceutical companies (Martinez). This shows a definitive shift in the conduct of PBM’s.
Managed care, managed care has become the dominant health care delivery source. Gaining popularity in 1990s, managed care increased from 27% in 1988 to 99% in 2009 and enrollment in Fee for Service plans decli...
This article, which was published in The New York Times on Sunday, November 12, discusses the American Medical Association’s recent plans to pull out of a deal that it had originally signed with the Sunbeam, Corp. and has signed a new deal to sell its subscription and membership list to a database marketing firm.
Maris, D. (2012) ‘What’s Really Driving the Pharma M&A Frenzy’, Forbes, 27 April [Online]. Available at: http://www.forbes.com/sites/davidmaris/2012/04/27/pharma-feeding-frenzy/ (Accessed at: 15 December 2013)
price, quality, convenience, and superior products or services); however, competition can also be based on new technology and innovation. A key role of competition in health care is the potential to provide a mechanism for reducing health care costs. Competition generally eliminates inefficiencies that would otherwise yield high production costs, which are ultimately transferred to patients via high health service and delivery costs” (http://www.ncbi.nlm.nih.gov). “Competition in health care markets benefits consumers because it helps contain costs, improve quality, and encourage innovation” (https://www.ftc.gov). Competition compels companies to deliver increasing value to customers. The fundamental driver of this continuous quality improvement and cost reduction is innovation. Without incentives to sustain innovation in health care, short-term cost savings will soon be overwhelmed by the desire to widen access, the growing health needs of an aging population, and the unwillingness of Americans to settle for anything less than the best treatments available. The United States can achieve universal access and lower costs without sacrificing quality, but only by allowing competition to work at all levels of the health care system. Prices remain high even when there is excess capacity. Technologies remain expensive even when they are widely used. Hospitals and physicians remain in business even when they charge