Medco Health Solutions
Pharmacy Benefit Management Scandal
CLASSIFICATION: Financial Crime
LOCATION
Franklin Lakes, New Jersey
TIME PERIOD
2003
VICTIMS
0 confirmed
On April 2, 2012, Medco Health Solutions, Inc., a prominent Pharmacy Benefits Management company based in Franklin Lakes, New Jersey, was acquired by Express Scripts, marking a significant consolidation in the healthcare industry. Founded in 1983 and originally known as National Pharmacies, Medco became a leader in pharmacy services, generating over $70 billion in revenue in 2011 and employing approximately 24,000 staff. The acquisition followed a period of growth and accolades, including being ranked first on Fortune magazine's World's Most Admired Companies list from 2008 to 2012. Currently, Medco is defunct as a separate entity, having fully integrated into Express Scripts, which continues to provide pharmacy benefit management services. Key figures involved included David B. Snow Jr., the CEO at the time of acquisition, and Kenneth O. Klepper, the President.
Community analysis and theories will be displayed here when available.
The Rise and Fall of Medco Health Solutions: A True Crime Narrative
In the world of pharmacy benefits management, Medco Health Solutions, Inc. was a titan. This American company provided essential pharmacy services to a diverse clientele, including private and public employers, health plans, labor unions, government agencies, and individuals under Medicare Part D Prescription Drug Plans. However, behind its corporate facade lurked a slew of legal and ethical controversies that would eventually lead to its acquisition by a competitor.
Origins and Evolution
Medco's journey began in 1983 under the name National Pharmacies. The following year, it underwent an initial public offering and rebranded as Medco Containment Services, LLC. This transformation marked the beginning of its rapid ascent in the pharmacy management industry. In 1993, the pharmaceutical giant Merck & Co., Inc. acquired Medco Containment, integrating it as Merck-Medco. By 2002, Merck had announced plans to spin off Medco, and in August 2003, Medco Health Solutions emerged as an independent entity.
As an independent company, Medco quickly became a force to be reckoned with, boasting a 2011 revenue of over $70 billion. It was listed on the New York Stock Exchange under the ticker MHS and was a proud member of the S&P 500. That year, Medco ranked number 34 on the Fortune 500 list. From 2008 to 2012, it held the top spot on Fortune magazine's World's Most Admired Companies list in the Healthcare: Pharmacy and Other Services category.
Expanding Horizons
Medco's ambitions were not confined to the United States. In March 2008, the company launched a collaboration with Sweden's Apoteket, then a government-operated retail pharmacy authority, to develop the first automated electronic prescription review system. This system aimed to enhance clinical and financial outcomes for Swedish patients and the healthcare system at large.
Back home, Medco's influence continued to grow. In October 2005, it was selected as the finalist for a three-year pharmacy benefit contract with the California Public Employees' Retirement System (CalPERS) Self-Funded Health Plans, set to begin in July 2006. Moreover, Medco established the Medco Research Institute in 2009, dedicated to evidence-based research.
Legal Troubles
Despite its success, Medco was not immune to controversy. In 2004, the company settled a lawsuit involving 20 states, which accused it of failing to disclose incentives from drug companies and improperly pressuring doctors to switch patients' medications, thereby inflating costs. Medco agreed to a $29.3 million settlement.
A year later, in 2005, Medco faced another significant legal challenge. It agreed to pay the United States $155 million plus interest to settle allegations of accepting kickbacks from drug manufacturers and submitting false claims to the government. Despite these hefty settlements, Medco admitted no guilt or wrongdoing.
Strategic Acquisitions
Medco's strategy involved a series of high-profile acquisitions to bolster its position. In 2005, it acquired Accredo Health, a specialty pharmaceutical company, for $2.2 billion. The acquisition spree continued in 2007 with the purchase of diabetes care supplier PolyMedica and in 2010 with genetic testing services company DNA Direct.
In September 2010, Medco acquired United BioSource Corporation, a company focused on assessing the safety and value of medications. Medco's expansion wasn't limited to the U.S.; in April 2008, it acquired a majority interest in Europa Apotheek, a Dutch company providing mail-order and specialty pharmacy services in Germany. By December 2009, Europa Apotheek Venlo had acquired shop-apotheke.com, a German online OTC and healthcare product site.
Medco also formed a joint venture with United Drug plc in August 2009 to provide home-based pharmacy care services in the UK. By October 2011, Medco had bought out its partner's share in this venture. In June 2010, Medco entered a European joint venture with Celesio AG for patients with chronic conditions, taking full control in September 2011.
The End of an Era
Despite its growth and acquisitions, Medco's journey came to an end in April 2012, when it was acquired by Express Scripts. This $29 billion merger marked the culmination of Medco's eventful journey, combining two giants in the pharmacy benefits management industry.
The Legacy of Medco
Medco's operations were extensive. It ran 10 mail-order pharmacies and partnered with approximately 60,000 retail pharmacies nationwide. Its automated pharmacies, located in Las Vegas, Indianapolis, and Willingboro, NJ, had the collective capacity to fill over three million prescriptions weekly. In 2011 alone, Medco's mail-order business generated $26 billion in net revenues, processing 113 million of the 757.7 million prescriptions filled by the company. Nearly 10.5 million of these prescriptions were ePrescriptions.
Medco held 42 U.S. patents related to patient data management, front-end pharmacy technology, and automated pharmacy technology, along with 56 international patents for automated pharmacy-dispensing technology. It was a pioneer in allowing customers to purchase medications online for home delivery.
Sources
For additional information, visit the Wikipedia page on Medco Health Solutions.
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Company Founded
Medco was founded as National Pharmacies.
Acquired by Merck
Medco Containment was acquired by Merck & Co., Inc.
Became Independent
Medco Health Solutions, Inc. became an independent company.
Lawsuit Settlement
Medco settled a lawsuit with 20 states for $29.3 million.
Acquired Accredo
Medco acquired Accredo Health for $2.2 billion.
Kickback Settlement
Medco agreed to pay $155 million to settle kickback allegations.
Acquired by Express Scripts
Medco Health Solutions was acquired by Express Scripts.
On April 2, 2012, Medco Health Solutions, Inc., a prominent Pharmacy Benefits Management company based in Franklin Lakes, New Jersey, was acquired by Express Scripts, marking a significant consolidation in the healthcare industry. Founded in 1983 and originally known as National Pharmacies, Medco became a leader in pharmacy services, generating over $70 billion in revenue in 2011 and employing approximately 24,000 staff. The acquisition followed a period of growth and accolades, including being ranked first on Fortune magazine's World's Most Admired Companies list from 2008 to 2012. Currently, Medco is defunct as a separate entity, having fully integrated into Express Scripts, which continues to provide pharmacy benefit management services. Key figures involved included David B. Snow Jr., the CEO at the time of acquisition, and Kenneth O. Klepper, the President.
Community analysis and theories will be displayed here when available.
The Rise and Fall of Medco Health Solutions: A True Crime Narrative
In the world of pharmacy benefits management, Medco Health Solutions, Inc. was a titan. This American company provided essential pharmacy services to a diverse clientele, including private and public employers, health plans, labor unions, government agencies, and individuals under Medicare Part D Prescription Drug Plans. However, behind its corporate facade lurked a slew of legal and ethical controversies that would eventually lead to its acquisition by a competitor.
Origins and Evolution
Medco's journey began in 1983 under the name National Pharmacies. The following year, it underwent an initial public offering and rebranded as Medco Containment Services, LLC. This transformation marked the beginning of its rapid ascent in the pharmacy management industry. In 1993, the pharmaceutical giant Merck & Co., Inc. acquired Medco Containment, integrating it as Merck-Medco. By 2002, Merck had announced plans to spin off Medco, and in August 2003, Medco Health Solutions emerged as an independent entity.
As an independent company, Medco quickly became a force to be reckoned with, boasting a 2011 revenue of over $70 billion. It was listed on the New York Stock Exchange under the ticker MHS and was a proud member of the S&P 500. That year, Medco ranked number 34 on the Fortune 500 list. From 2008 to 2012, it held the top spot on Fortune magazine's World's Most Admired Companies list in the Healthcare: Pharmacy and Other Services category.
Expanding Horizons
Medco's ambitions were not confined to the United States. In March 2008, the company launched a collaboration with Sweden's Apoteket, then a government-operated retail pharmacy authority, to develop the first automated electronic prescription review system. This system aimed to enhance clinical and financial outcomes for Swedish patients and the healthcare system at large.
Back home, Medco's influence continued to grow. In October 2005, it was selected as the finalist for a three-year pharmacy benefit contract with the California Public Employees' Retirement System (CalPERS) Self-Funded Health Plans, set to begin in July 2006. Moreover, Medco established the Medco Research Institute in 2009, dedicated to evidence-based research.
Legal Troubles
Despite its success, Medco was not immune to controversy. In 2004, the company settled a lawsuit involving 20 states, which accused it of failing to disclose incentives from drug companies and improperly pressuring doctors to switch patients' medications, thereby inflating costs. Medco agreed to a $29.3 million settlement.
A year later, in 2005, Medco faced another significant legal challenge. It agreed to pay the United States $155 million plus interest to settle allegations of accepting kickbacks from drug manufacturers and submitting false claims to the government. Despite these hefty settlements, Medco admitted no guilt or wrongdoing.
Strategic Acquisitions
Medco's strategy involved a series of high-profile acquisitions to bolster its position. In 2005, it acquired Accredo Health, a specialty pharmaceutical company, for $2.2 billion. The acquisition spree continued in 2007 with the purchase of diabetes care supplier PolyMedica and in 2010 with genetic testing services company DNA Direct.
In September 2010, Medco acquired United BioSource Corporation, a company focused on assessing the safety and value of medications. Medco's expansion wasn't limited to the U.S.; in April 2008, it acquired a majority interest in Europa Apotheek, a Dutch company providing mail-order and specialty pharmacy services in Germany. By December 2009, Europa Apotheek Venlo had acquired shop-apotheke.com, a German online OTC and healthcare product site.
Medco also formed a joint venture with United Drug plc in August 2009 to provide home-based pharmacy care services in the UK. By October 2011, Medco had bought out its partner's share in this venture. In June 2010, Medco entered a European joint venture with Celesio AG for patients with chronic conditions, taking full control in September 2011.
The End of an Era
Despite its growth and acquisitions, Medco's journey came to an end in April 2012, when it was acquired by Express Scripts. This $29 billion merger marked the culmination of Medco's eventful journey, combining two giants in the pharmacy benefits management industry.
The Legacy of Medco
Medco's operations were extensive. It ran 10 mail-order pharmacies and partnered with approximately 60,000 retail pharmacies nationwide. Its automated pharmacies, located in Las Vegas, Indianapolis, and Willingboro, NJ, had the collective capacity to fill over three million prescriptions weekly. In 2011 alone, Medco's mail-order business generated $26 billion in net revenues, processing 113 million of the 757.7 million prescriptions filled by the company. Nearly 10.5 million of these prescriptions were ePrescriptions.
Medco held 42 U.S. patents related to patient data management, front-end pharmacy technology, and automated pharmacy technology, along with 56 international patents for automated pharmacy-dispensing technology. It was a pioneer in allowing customers to purchase medications online for home delivery.
Sources
For additional information, visit the Wikipedia page on Medco Health Solutions.
No Recent News
No recent news articles found for this case. Check back later for updates.
No Evidence Submitted
No evidence found for this case. Be the first to submit evidence in the comments below.
Join the discussion
Loading comments...
Company Founded
Medco was founded as National Pharmacies.
Acquired by Merck
Medco Containment was acquired by Merck & Co., Inc.
Became Independent
Medco Health Solutions, Inc. became an independent company.
Lawsuit Settlement
Medco settled a lawsuit with 20 states for $29.3 million.
Acquired Accredo
Medco acquired Accredo Health for $2.2 billion.
Kickback Settlement
Medco agreed to pay $155 million to settle kickback allegations.
Acquired by Express Scripts
Medco Health Solutions was acquired by Express Scripts.