Caremark Rx Officials Announce Merger With Advance PCS Is Complete
Officials for Tennessee-based pharmacy benefit manager Caremark Rx on Wednesday announced that the company has completed a more than $6 billion merger with Texas-based PBM Advance PCS, the Tennessean reports. Shareholders for both companies earlier this week approved the merger, which will create the second-largest PBM in the nation (Russell, Tennessean, 3/25). Caremark in September 2003 announced plans to purchase AdvancePCS for $5.6 billion in stock and cash. The merged company will process about 600 million prescriptions per year and will have estimated annual revenue of $23 billion. The merger will provide Caremark with a 20% market share as measured by prescriptions processed, compared with a 22% market share for Medco Health Solutions, the largest PBM in the nation. The merger raised concerns about the potential effect on competition in the PBM market, as well as the $5.6 billion price, which some analysts considered overvalued. However, the Federal Trade Commission approved the merger after an investigation into the potential effects on competition in the PBM market. According to FTC, PBMs will face adequate competition to make the market viable, and competition from other PBMs, pharmacies and health insurers "should suffice to prevent this acquisition from giving rise to a potentially anticompetitive price increase" (Kaiser Daily Health Policy Report, 2/12).
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