Merck Medco

Topics: Pharmacology, Pharmaceutical industry, Pharmacy Pages: 3 (742 words) Published: March 10, 2015
Merck is a pharmaceutical manufacturer in the U.S. It has been doing well before integrated with Medco. The process of developing new drug is time-consuming. Also, over the past decades, the pressure has increased to expedite the drug approval process. Because of this, it becomes more difficult for Merck to increase the yield from its research and development activities. The period between 1993 and 1994, Merck acquired Medco. Medco is a distribution intermediary company called Pharmacy Benefit Manager (PBM). PBM is responsible for processing and paying prescription drug claims for its participants, like self-insured employers, insurance carriers, Blue Cross/Blue shield plans, managed care organizations, and government health plans. PBM was able to manage the cost of drug benefits, improve the appropriate use of prescription drugs. What’s more, they are responsible for developing and maintaining companies’ drug lists, contracting with pharmacies, and negotiating discounts and rebates with manufacturers. By the acquisition of PBM Medco, Merck would be able to acquire pharmacy management competencies quickly and effectively. But at the same time, acquiring Medco also needs to face the value difference between each other. After Merck and Medco merging together, Merck-Medco became the leading company in pharmaceutical industry. Even the company succeeded, there was the other company opted not to buy a PBM. The problem for Merck-Medco is whether the integration is sustainable or not? The integration is beneficial since Merck-Medco grew more rapidly and reduced the costs by providing mail services. It helped the company to save money and reduce the amount of representatives. Also, Medco has strong information system that linked pharmacies and physicians together. Such information network knows the pattern of prescription and patients’ buying behaviours. Because patients always follow physicians’ prescriptions, Medco could review the prescription and tell physicians to...
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