Express Scripts Signs Deal to Acquire PBM from SB

By Fleming, Harris Jr | Drug Topics, March 1, 1999 | Go to article overview
Save to active project

Express Scripts Signs Deal to Acquire PBM from SB


Fleming, Harris Jr, Drug Topics


The old business adage that all rumors have a grain of truth to them proved itself recently when SmithKline Beecham revealed that it would sell off Diversified Pharmaceutical Services (DPS), its pharmacy benefit management arm, to Express Scripts, another large PBM. A sale had been rumored for more than a week, although the buyer was expected to be a drugstore chain keen on keeping pace with Rite Aid, which bought PCS from Eli Lilly & Co. in January.

According to Diana Baumohl, v.p.-strategic planning for Express Scripts, DPS was an attractive acquisition prospect because of the volume of business the company has been doing in particular segments of managed care. Combined, Express Scripts and DPS cover approximately 47 million lives and manage nearly $10 billion in annual drug spending. Upon consummation of the deal, the new company will be the third-largest PBM in the country, behind PCS and Merck-Medco.

It was really "a significant step in terms of market share pickup for us," Baumohl said, adding that the combined company would be "the single largest provider of PBM services to the health maintenance organization sector. We think that's important. It's the fastest-growing area within methods of health insurance." The acquisition also strengthens the company's position in negotiating rebates "because HMOs are typically more aggressive in terms of plan design changes and understanding the ramifications of formularies," Baumohl said.

Market conditions indicated that buying DPS might be a good idea, as well; the price ($700 million) was right, as it was when Express Scripts bought ValueRx for $445 million last April. "Therefore [we could] continue to deliver shareholder value. At the same time, we think strategically it positions the company better," she said. "Acquisitions have always been a part of our growth strategy. Most important, we are comfortable enough at this point, given where we were with our integration process of ValueRx, that we could successfully integrate this property into our company.

The deal comes on the heels of Rite Aid's muchpublicized acquisition of PCS from Eli Lilly In spite of the fact that both deals had drugmakers selling their PBM businesses at a loss, Baumohl dismissed the notion that manufacturer ownership may not be feasible in the PBM market.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Express Scripts Signs Deal to Acquire PBM from SB
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?