Albertsons gets green light to acquire Rite Aid

Grocery chain operator Albertsons has just received the go-ahead from the government to acquire Rite Aid. That deal will combine approximately 2500 Rite Aid stores with Albertson’s 2200 grocery stores which include brands such as Safeways and Jewel Osco.

Of the key offering in the Rite Aid acquisition is – EnvisionRx, a national fully integrated retail, mail-order and specialty pharmacy benefits management (PBM) company.

EnvisionRx, apparently provides full disclosure in the PBM marketplace, promoting a transparent, pass-through business model in which 100% of earned rebates, discounts, and incentives are instantly credited at the point of sale to customers.

Rite Aid only acquired that PBM back in 2015. The consolidation continues the vertical integration in health care where distribution channels (stores) combine with the middle men (benefits administrator) to accelerate sales.

Rite Aid completes transfer of stores to Walgreens

According to a March 2018 press release, 1932 stores and three distribution centers have now been transferred to Walgreens Boot Alliance for an estimated $4B.

However, that doesn’t account for all of Rite Aid’s approximately 4500 drug stores.  Due to a government antitrust Walgreens/Rite Aid merger block, the remaining stores and PBM will instead go to recent acquirer – grocery store chain –  Albertsons.

 

 

GSK diversifies revenue with Consumer Health division

According to the FT, GSK bought out Novartis 36.5% stake in their consumer health joint venture partnership for $13B. That move brings to GSK – sole ownership of products such as OTC tooth paste Sensodyne while enabling GSK to strengthen its consumer health division within its three main revenue drivers.

GSK’s consumer health division make up approximately 25% of sales while the Pharma drug discovery arm make up 50% of sales. The other 25% of sales comes from vaccines.

The company was originally set to acquire Pfizer’s Consumer Health arm for a similar price in a diversification strategy that would have given it the OTC brand – Advil.

Pfizer’s consumer health arm remains on sale.

CVS Health and Aetna

We have all heard the news by now of the Aetna and CVS Health $69B merger. What remains to be seen is the disruptive element. It’s business as usual. Or perhaps – economy of scale?

There was already a tie up as far back as 8 years ago. According to a 2010 WSJ article, Aetna contracted out long-term administration of its pharmacy-benefit business to CVS Caremark Corp in a 12-year agreement that offered prescription-drug discounts to some 10 million members.

As part of the arrangement for that deal, Aetna transferred 800 of its own PBM employees to CVS Caremark and retained 1,000 PBM employees. For such a tightly integrated deal, and the present day opportunity in drug costs, it was only a matter of time that the two companies merged.

Other opportunities in the merger is the ability for narrow networks in the benefit design. CVS minute clinics offering expanded/concierge options to Aetna self insured customers (large employers).

Cigna and Express Scripts

It is no longer a secret that these two firms are merging. Considering that their main competitors already have pharmacy benefit managers (PBM)-  United – Optum Rx, Humana (it’s own PBM), and Aetna (CVS Caremark), it makes sense.

According to Fierce Pharma, the industry continue to speculate about Amazon’s intentions in the drug business. Besides its recent partnership with J.P. Morgan and Berkshire Hathaway to explore care plans with their employee population, what is clear is that creating a more efficient medicines supply chain is in its sights.

 

Medicare Advantage Startup Clover Health posts $22M loss

Digital health company, Clover which offers insurance to seniors in New Jersey, and now to parts of Georgia, Pennsylvania and Texas posted a $22M loss in 2017.

The company serving the lucrative and stable Medicare Advantage market made revenue of $267M that year according to Bloomberg

It only takes a quick reading of the chart from the Kaiser Family Foundation below to note why this market is lucrative. The Medicare Advantage market is now 33% of Medicare – that’s 19 million people served from just 7 million people in 1999.  Average premiums are $36 per person.

Medicare Advantage Enrolment

With almost 50% of the market dominated by United Health and Humana per Figure 6 KFF,

Enrolment by Insurer MA.png

 

Clover has some work to do. On the immediate list for the firm include focusing on it’s sickest customers – to drive down ER costs/use, getting it’s Medicare Stars Rating up towards the perfect ‘5’ score and negotiating narrow-er networks.

Uber launches UberHealth

Uber is going into healthcare  and for them that means transporting patient back to their homes from the hospital. They are going after the “missed appointments” market.

Regarding their B2B business model, according to TechCrunch, Uber Health charges  healthcare organization customers only for the cost of individual rides, which are at par with what those rides would cost via the consumer app. Access to a dashboard and the reporting tools are included free for the health care organization.

Apparently, Uber there are already over 100 healthcare organizations on the platform. As the company has an API for providers to build the service into their existing patient management software, it opens up opportunities for integrated digital health ecosystem partnerships with other firms.