Express Scripts Buys WellPoint Pharmacy Benefit Unit, NextRx
The purchase will position Express to compete with its major competitors in the sector, Medco Health Solutions and CVS Caremark. With the acquisistion, Express will become the second largest player in the pharmacy benefits management sphere, suprassing its rival CVS Caremark.
WellPoint remains one of the country's largest insurers.
There has been speculation for some time that health insurers would have to unload their prescription benefits management subsidiaries in the face of languishing share prices and the uncertainty surrounding the Obama Administration's plans to reform the US health care industry. The continued rise in unemployment rates likely also influenced WellPoint's decision to sell NextRx, since the company could likely face lower earnings as the newly jobless lose their health coverage.
Express stands to gain since, by adding to its list of managed prescriptions, it gains additional leverage against drug companies when negotiating prices. This should increase its competitiveness against Medco and CVS Caremark.
There is also an element of revenge in the deal for Express. CVS and Express once battled to take over Caremark Rx, and, even though Express' offer was better, antitrust concerns scuttled the deal and CVS ended up acquiring Caremark.
Now, Express has overtaken CVS Caremark as the second largest prescription benefit management company, and can chalk up a win against its competitor.
Express Scripts to buy WellPoint units for $4.68B (AP)
Express Scripts to Buy WellPoint's Pharmacy Unit (NYTimes)
Express Scripts, WellPoint shares jump on deal (MarketWatch)
Corporate Counsel Center for the Insurance Industry (FindLaw)
Corporate Counsel Center for Mergers & Acquisitions (FindLaw)
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