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.

 

 

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.