Medco deal ups ante in specialty pharmacy

Chain Drug Review, Sept 26, 2005

FRANKLIN LAKES, N.J. -- Biotech and specialty pharmacy is evolving from a niche sector to a priority among employers and health care plans seeking avenues for providing care to their members while managing the price tags of such medications--which often cost thousands of dollars a month.

And that financial toll is likely to increase--more than 350 biotechnology medicines to treat nearly 150 different diseases are in the pipelines.

Recognizing this movement, Medco Health Solutions Inc. last month completed its $2.3 billion acquisition of Accredo Health, uniting two companies to create what is being defined as the largest specialty pharmacy operation in the country--one that could hold far-reaching implications for all of the health care sector. Accredo's ties with manufacturers of such medications, combined with Medco's expertise in managing the pharmacy health care of what Medco says is one in four Americans, place the new entity in a strong position to help contain specialty drug trends, which Medco maintains has surged more than twice the overall rate of drug spending.

Medco's August acquisition of Accredo coincided with the pharmacy benefits manager's second anniversary as a public company and created a combined company with over $4 billion in annual revenues.

"The acquisition of Accredo complements our technologically superior mail-order pharmacies, our award-winning Internet pharmacy, and nationally recognized clinical care and customer care centers, and secures leadership positions for Medco in each strategically critical service area provided by PBMs, allowing us to deliver the highest-quality pharmacy health care and the most convenient customer service at the lowest possible cost," says David Snow Jr., Medco's chairman, president and chief executive officer.

The transaction marks Medco's first major acquisition as a public company and expands its specialty product line of more than 120 medicines. Accredo brings nearly two dozen specialty drug therapies across a broad spectrum of therapeutic categories.

Based in Memphis, Accredo provides specialty pharmacy services for patients with chronic and potentially life-threatening diseases. It will operate as an independent unit segment of Medco. It has a reputation as a niche provider of specialized retail pharmacy and related services to biopharmaceutical manufacturers.

"Medco has literally invented the technologies that enable pharmacies to operate with unprecedented safety and efficacy while Accredo has developed an advanced model for 'high-touch' clinical care," claims Kenneth Klepper, Medco's executive vice president and chief operating officer. "There is a great deal our organizations can learn from one another and build on to enhance our continued growth and success in pursuit of better serving our clients and patients."

Medco launched its specialty pharmacy operations two years ago. Last year it forged a 10-year alliance with Accredo to create a single platform for all specialty pharmaceuticals, which require special handling and extensive clinical support.