Magazine article Drug Topics

No Cheers Greet Merger of PCS, Advance Paradigm

Magazine article Drug Topics

No Cheers Greet Merger of PCS, Advance Paradigm

Article excerpt

Pharmacists aren't leaping up to applaud the latest merger in the pharmacy benefit management world. As the news sinks in that Advance Paradigm Inc. (API) is buying PCS from Rite Aid, pharmacist reaction has ranged from concern to outright condemnation. This purchase follows the recently announced merger of Merck-Medco and ProVantage.

The mildest reaction came from the National Community Pharmacists Association. NCPA vp. of communications Todd Dankmeyer said the group has reservations about the PCS acquisition and API's plans for the future. "There seems to be a strategy to aggressively leverage mail order," he said. "That's harmful to consumers and to pharmacy as well. They have also said they are looking to leverage pharmacist reimbursements. We've already absorbed about as many hits as the market will sustain."

The American Pharmaceutical Association was more direct. "I see no reason for optimism," said APhA treasurer Lowell Anderson, owner of Bel-Aire Pharmacy in suburban Minneapolis. "All I've seen from API is professional indifference-no sense of pharmacy or professionalism."

What does APT see for the combined company, Advance PCS? Explanations that chairman and CEO David Halbert and CFO Danny Phillips gave analysts and reporters when the deal was announced in early July offer some clues. For starters, pharmacists can expect continuing downward pressure on reimbursement. Phillips said the combined company expects to generate at least $10 million in additional revenue by reducing payments to pharmacists. Advance PCS expects to earn another $10 million by increasing rebates from manufacturers.

Advance PCS also wants to boost its mail-order business. The combined company will process about nine million mail-order Rxs annually, compared with 60 million Rxs mailed out by Medco, the leader in mail-order pharmacy. …

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