Convergence: Is Bigger Better?

We would like to welcome a new set of readers to Specialty Pharmacy Times®, which will now reach a wider audience that will include market access professionals and key payer decision makers. The launch of this journal in 2010, spinning off from our sister publication, Pharmacy Times®, resulted from recognizing the growth of specialty out of retail. With spending on specialty products currently approaching nearly 50% of the total drug spend, market access is a key issue. Moving forward, we will be expanding the content of this journal to include greater insight on topics such as reimbursement, formularies, and pharmacoeconomics and the corresponding relationship with specialty therapeutics. We also welcome Doug Hillblom, PharmD, to the team as our associate editor-in-chief, Market Access Solutions.

The Natural Order or Disorder?

Mergers and acquisitions are nothing new in the health care arena. Remember when names such as Parke-Davis, Wyeth, Lederle, Upjohn, Searle, and Beecham were prevalent? Today those organizations have been absorbed into the likes of Pfizer, Merck, and GlaxoSmithKline. In the world of specialty pharmacy, we have seen much of the same. In fact, many specialty pharmacies got started with the objective of growing to the point of acquiring or being acquired. Retail-chain pharmacy has arguably experienced the same acquisition frenzy, with pharmacies such as Thriftway, Eckerd, Longs, and Safeway being absorbed by larger chains Walgreens, CVS, and Albertsons. These acquisitions have been part of the natural order, as big fish eat small fish. What is not the natural order, however, is when mergers and acquisitions bring together disparate businesses—notably, the merger of CVS and Caremark in 2006.

There have been similar deals since, such as Rite Aid’s acquisition of EnvisionRx, the partnership between Walgreens and Prime Therapeutics to create AllianceRx, as well as Diplomat’s role in the game with National Pharmaceutical Services.

Most recently, rumors had been brewing for quite some time when, in late 2017, CVS and Aetna announced their merger. In a news release, CVS Health President and CEO Larry J. Merlo said, “This combination brings together the expertise of 2 great companies to remake the consumer health care experience. With the analytics of Aetna and CVS Health’s human touch, we will create a health care platform built around individuals."

CVS/Caremark’s specialty pharmacy was already poised to be one of the highest revenue generators in the specialty space. Given the integration of Aetna, even more volume will potentially be driven to its platform. Still in question is what the value proposition will be beyond enhancing shareholder value.

Power of the Payer

We have already seen the power of the payer in the specialty space, particularly when there are different treatment options for a specific condition. We need not look any further than the impact that payers had on the market following the launch of multiple oral antiviral drugs for hepatitis C virus. Initially, ledipasvir/sofosbuvir (Harvoni) owned the market by offering a curative oral therapy for this terrible disease without the debilitating adverse effects of existing therapies. But the cure came with a high price tag, at nearly $90,000 for a short course of therapy. With a lack of competition, the need for contracting was not significant. But then along came a second quality alternative therapy in the form of ombitasvir/paritaprevir/ritonavir and dasabuvir (Viekira Pak), and the large pharmacy benefit managers (PBMs) took a stand on which of these treatments would be available to the appropriate patients. For payers, size and compliance equal control and, in turn, leverage. With increased scale, will CVS/Aetna have even more dominion over specialty product selection? History tells us yes.

Combining insurance coverage for drugs and other medical services within a single firm could be a novel benefit offered to the private insurance market of patients under 65. The merger of an insurer and its physician networks with a national pharmacy chain’s integrated care model and drugstore—retail clinic combination can deliver a new model of access to better care at a lower cost.

Bringing It Together

Convergence and integration of resources come to mind when 2 lead players merge. Think of your smartphone today versus what we had in place just a few short years ago. We can manage our e-mails, schedule our day, pay for goods and services, watch our favorite shows, check the weather, and get directions to a location while trying to avoid traffic. We have become near totally reliant on these devices for the fundamentals of daily living. Think about what would happen if you left your smartphone at home: How far would you be willing to backtrack to get it? Now, imagine having a one-stop shop for health care.

Will It All Add Up?

The champions of this merger are quite bullish on the value proposition. It is hoped that patients will benefit from a uniquely integrated, community-based health care experience. There are nearly 10,000 pharmacies located throughout the United States via both the CVS and Target platforms and approximately 1100 MinuteClinic locations, along with 35 accredited CVS specialty pharmacies. CVS has also added resources through its acquisition of leading senior care pharmacy provider Omnicare, as well as Coram CVS Specialty Infusion Services. Furthermore, there are more than 4000 CVS Health nursing professionals providing in-clinic and home-based care across the nation.

The pharmacist is already known as the most accessible professional in the health care continuum. An integrated CVS/Aetna solution theoretically will enhance access to the health care system by better connecting patients’ primary caregivers or enhancing access to more immediate care through the services of an in-store clinic. These clinics can serve as a hub dedicated to connecting the pathways needed to improve health and answering patients’ questions about their conditions, prescription drugs, and health coverage.

What Is the Next Big Move?

The lack of quality integrated data platforms in the United States has been a major impediment in providing quality health care. Combining platforms will assist in fostering a more coordinated approach to managing patient care, while the broader use of data and analytics can lead to fewer hospital readmissions. It seems that there are few limits to the number of combinations of business models. Will we see hospital networks thrown into the mix next?

The way many people shop for personal items and groceries has already changed through companies such as Amazon, but the question remains regarding whether it will enter the health care space through a purchase or a strategic alliance. What about the other payers and PBMs? Technology has already revolutionized so much in our daily lives. Is there an app out there that can harness an innovation yet to come to market to create a new form of convergence and integration?

Is bigger better? It all depends on your perspective. But regardless of what the new era of health care brings, remember, all roads to success must put the patients first.