Rite Aid buys PBM EnvisionRx for $2 billion

February 12, 2015

Rite Aid Corp. has announced its plan buy pharmacy benefits manager EnvisionRx for about $2 billion.

In a move widely seen as a way to better compete with the other major chain drugstores, Rite Aid Corp. announced an agreement on Feb. 11 to buy the pharmacy benefits manager (PBM) EnvisionRx for about $2 billion.

Rite Aid will pay the investment firm TPG about $1.8 billion in cash and $200 million in stock for the PBM. EnvisionRx provides pharmacy, specialty pharmacy, and mail-order services and is projected to produce about $5 billion in revenues this year.

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"The acquisition of EnvisionRx meaningfully expands our health and wellness offerings, enhancing our ability to provide a higher level of care to the patients and communities we serve," said John Standley, Rite Aid’s chairman and CEO. "With the addition of EnvisionRx, we will create a compelling pharmacy offering across retail, specialty, and mail-order channels, enabling us to deliver cost-effective solutions to employers and health plans while driving growth and creating long-term value for our shareholders."

Sharad Mansukani, chairman of EnvisionRx, added: “[Our] innovative business model has always set it apart from other PBMs, and as part of a recognized pharmacy leader, will now be well positioned for further success…. EnvisionRx has built a best-in-class company with tremendous potential, and as a ground-breaking PBM, it has a great future as part of Rite Aid."

EnvisionRx, headquartered in Twinsburg, Ohio, provides both transparent and traditional PBM offerings through its EnvisionRx and MedTrak PBMs, respectively. Its fully integrated mail-order and specialty pharmacy services are operated through Orchard Pharmaceutical Services. EnvisionRx will operate as a wholly owned subsidiary of Rite Aid and will be led by Frank Sheehy, EnvisionRx’s CEO.

 

In 2006, CVS Health Corp. bought PBM Caremark Rx for $21 billion. Analysts believe Rite Aid’s purchase of EnvisionRx will help it compete with the larger chains CVS and Walgreens by providing greater access into the lucrative specialty drugs market.

Kip Piper, MA, FACHE, an advisor with Sellers Dorsey, a healthcare consultancy in Washington, D.C., called Rite Aid’s purchase of EnvisionRx a smart move. “Envision is a very capable, exceptionally well-managed pharmacy benefit manager. That will be key to the ability of Rite Aid competing in the increasingly integrated pharmacy market,” Piper said. “Vertical and horizontal integration of the pharmacy services’ market presents opportunities and challenges for health plans and independent community pharmacies.”

Piper does warn that the government must closely monitor the relationships between the large chains and PBMs. “Integrated arrangements inevitably raise concerns about transparency of pricing, passing along rebates and discounts, adequacy of networks, and safeguards to ensure interests are aligned,” he said.

See also:

Okla. independents rally against PBMs

CVS pharmacies to provide access to specialty meds