Rite Aid To Start PBM With Third-Party Vendor
This article was originally published in The Pink Sheet Daily
Executive Summary
Rite Aid is in negotiations with potential partners to establish a pharmacy benefit management subsidiary, CEO Sammons says. The PBM division would accommodate managed care plan mail order prescriptions with a third party providing claims adjudication and mail order services.
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Rite Aid is in negotiations with potential partners to launch its own pharmacy benefit management company to position itself for the Medicare prescription drug benefit in 2006, CEO Mary Sammons said during a conference call April 7. The PBM division would enable Rite Aid to accommodate managed care plan mail order prescriptions, with the third party providing administrative services. "We have laid out our preliminary plan for developing our own internal management sales and marketing team and, as we have said before, PBM capability will give us a seat at the table to compete for managed care plans and protect our market share," Sammons said. The third-party partner would be responsible for claims adjudication and mail order services, she said. "We're pretty close...to announcing what we are doing and how we will be doing it," Sammons said. Rite Aid will aim to have a sales force in place by mid-year, but expects the impact from the business to be marginal in 2005. The PBM venture's focus will be on driving pharmacy prescriptions by being competitive on price, the company said. "We didn't start this up as a 'profit center' or a future source of giant revenue," CFO John Standley said. "We're in it to drive scripts in our stores." The Centers for Medicare & Medicaid Services' deadline for applications from entities interested in sponsoring Medicare Part D plans beginning in January 2006 was March 23. Rite Aid's two biggest competitors, CVS and Walgreens, have publicly announced that they are seeking to sponsor Part D plans. CVS, in conjunction with Universal American, is seeking to sponsor a regional plan. CVS offers PBM services through its PharmaCare subsidiary. Ovations is partnering with Walgreens' PBM division to sponsor a national prescription drug plan (1 (Also see "Ovations Chooses Walgreens PBM To Administer Medicare Part D Plan" - Pink Sheet, 17 Mar, 2005.)). Rite Aid announced in September that it would consider re-entering the PBM sector after seeing earnings dip partly due to mandatory mail contracts (2 (Also see "Rite Aid Decision On Return To PBM Sector Will Come In “Next Few Months”" - Pink Sheet, 23 Sep, 2004.)). Rite Aid was an early retail entrant in the PBM market when it acquired PCS from Lilly in 1999, but the company divested the business one year later. - Jessica Merrill |