New Pharmacy Services Organization Merger May Influence Managed Care Contracting

In a February 29, 2016, press statement, American Associated Pharmacies (AAP) and HD Smith (HDS) announced that they have combined their pharmacy services administrative organizations (PSAOs) into a new, stand-alone entity, Arete Pharmacy Network.

The new PSAO will serve more than 2300 independent retail pharmacies across the United States, taking over operations from United Drugs (AAP) and Third Party Network (HDS).

National Footprint of Pharmacy Service Administrative Organizations

As payors create network maps for 2017 and beyond, they will find Arete Pharmacy Network to have “…a much stronger geographic footprint—now spanning the nation,” said Rob McMahan, President of United Drugs and CEO of the new PSAO. “Arete Pharmacy Network will now be the largest PSAO in a number of regions, California being one of them.”

The new PSAO network combines concentrations of independent pharmacies in the West and Southeast from United Drugs, in the Northeast and Midwest from Third Party Network, and California markets from both.

"Independent drugstores have long had large conglomerates negotiating and purchasing medications on their behalf. This should help show policymakers that their buying power is increasing even more," said Greg Lopes, Senior Director of Strategic Communications at the Pharmaceutical Care Management Association (PCMA).

What Can Pharmacy Benefit Managers and Pharmacies Expect?

Pharmacy benefit managers (PBMs) currently working with United Drugs or Third Party Network will see operational integrations take place over the next few months.

Through its Arete Quality Center, already in place online, the PSAO expects to give retail pharmacies greater capabilities to tailor information by plan, pay-for-performance program, or geographic region—down to the claim or patient level.

McMahon expects these new tools to help retail pharmacies deal with the complexity of today’s multipayer environment, more easily viewing how they are seen by each payer and the daily steps they can take toward improving their Star Ratings and other quality metrics.

Other “enhanced capabilities” that can be expected from Arete Pharmacy Network’s “efficiencies of scale” will be to “educate and reinforce compliance, address underpaid claim reimbursements, provide audit protection, and ensure all payments are processed to pharmacies as quickly as possible,” according to the press release.

What Is In a Name?

Arete (pronounced, ahr-i-tey’) Pharmacy Network chose its name from a Greek word that connotes excellence, explained McMahon. He wants his new organization to become known for driving quality improvement and patient satisfaction.

Leaders say that this merger will focus on managed care contracting and expanding tools and services that allow pharmacies to differentiate themselves with efficiency, effectiveness, quality patient care, and better patient outcomes.