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
Bigger hospitals increasing market share Loss of Medicaid and Medicare reimbursement Decline in revenue Loss of patients
Bargaining Power of Buyers. This is the most concerned force because many companies in the drugstore industry start to do the same thing as Walgreens.
Federal Trade Commission, 1979. Braithwalte, John. The. Corporate Crime in the Pharmaceutical Industry? Boston, MS: Routledge & Kegan Paul, 1984.
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.
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.
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.
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.
Formed in 1998, the Managed Care Executive Group (MCEG) is a national organization of U.S. senior health executives who provide an open exchange of shared resources by discussing issues which are currently faced by health care organizations. In the fall of 2011, 61 organizations, which represented 90 responders, ranked the top ten strategic issues for 2012. Although the issues were ranked according to their priority, this report discusses the top three issues which I believe to be the most significant due to the need for competitive and inter-related products, quality care and cost containment.
Threat of new entrants is relatively high. Companies forming alliances are potential rivals. Even if earlier such company was not considered to be a threat, after merging with some research and development company or forming alliance with another pharmaceutical company it would become a rival to Eli Lilly. The threat is however weakened by significant research and development costs necessary to successfully enter the business. Eli Lilly’s focus on a relatively narrow market of sedatives and antidepressants weakens the threat of new entrants, but other products that form lesser part of company’s sales such as insulin and others are exposed to high threat of new entrants. The need of obtaining certificates and licenses also weakens the threat of new entrants. Discussed above leads to the conclusion that threat of new entrants is medium.
... middle of paper ... ... 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.
Less than 2% of respondents felt the merger was a positive for pharmacists. Conversely, 82% said no. The balance are unsure at this point.
10. Collis, David, and Troy Smith. "Strategy in the Twenty-First Century Pharmaceutical Industry:Merck&Co. and Pfizer Inc." Harvard Business School, 2007: 8-12.
PROBLEM STATEMENT Teva Pharmaceuticals, the first multinational pharmaceutical company in Israel, has become a successful global giant in the industry of generic drugs. After experiencing a long period of success and growth in the generic drug industry against some big western pharmaceuticals, the company had acquired many well known pharmaceutical companies and had achieved its goal of $1 billion. theory seemed to be in trouble in building a new strategy and vision to compete with the rapidly growing generic industry. They confronted two big issues as key hurdles in their way.
As a front line manager, Lorna directly supervises other pharmacists, a pharmacy assistant, a department manager, and several sales associates. She works with the store and assistant managers to communicate weekly plans within all divisions of the store. The pharmacy district manager provides Lorna with information on budgets, wages, and corporate health and wellness programs. The regional manager, senior head office managers, and Vice President of Health and Wellness ensure that all Walmart pharmacies follow the guidelines established within the corporate framework.
Cravens, D. W., & Piercy, N. F. (2009). Strategic marketing (9th ed.). New York, NY: McGraw-Hill.