Two things stood out for me in the Reuters report last week that Medco Health Solutions had emerged as the lead bidder to acquire Aetna’s pharmacy benefit management operation.
The first is that the Aetna PBM appears to be attracting little interest from potential buyers, according to Reuters. The second is that the auction might end if Aetna fails to get the right price. Neither is a big suprise.
After WellPoint sold its PBM for a hefty $4.7 billion, several industry observers (myself included) figured others would follow.
The problem is that the WellPoint PBM operation was unique. Unlike most health plan-owned PBMs — which largely serve their own capitive medical members – the WellPoint operation was pretty successful at winning outside business. It also had the size and scale to wield considerable purchasing power; albeit, not at the level of standalone PBMs.
In contrast, PBM operations owned by other managed care companies — e.g., Aetna and Cigna — don’t have near the scale or roster of outside clients. Consequently, it’s unlikely they would yield the type of buyout multiple WellPoint’s PBM attracted.
That’s why I wrote last month that analysts’ projections probably overstated the value of the Aetna PBM — putting it at anywhere from $1.6 billion to $2.4 billion. We shall see.
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December 23, 2009 at 6:58 pm
So, what do you think happened? neither Cigna or Aetna’s PBMs were sold. Did they want too much? Did the market change? Was uncertainty over health reform an issue? Did every opt to focus internationally?