Dohmen Co. buys Centric Health Resources, intent on building a 'conflict free' drug-distribution system

Pharmaceutical CommercePharmaceutical Commerce - July/August 2011

Company says that its focus is on best value for payers, patients while meeting manufacturers’ needs through a ‘compressed’ supply chain

Dohmen Co. (Milwaukee) has acquired privately held Centric Health Resources (Chesterfield, MO) for an undisclosed sum. Dohmen operates several companies that provide services either to pharma manufacturers or to pharma payers; Centric is a hybrid of a direct-distribution company and a specialty pharmacy, serving the orphan- and ultra-orphan drug markets with distribution services and a range of patient services. The acquisition is the third of Dohmen’s this year; earlier, in private transactions, it acquired PlanIT (Germantown, WI) an analytics company for healthcare payers, and MedComm Solutions (Emeryville, CA), a medical communications company for manufacturers.

All these acquisitions are part of a long-range plan, according to Cynthia LaConte, CEO (and fifth-generation Dohmen family member). “The traditional pharmaceutical supply model is broken; we pay too much for healthcare and expect too little in healthcare outcomes,” she says. “Part of that comes from inherent inefficiencies in our healthcare supply system. There are too many intermediaries between manufacturers and the patients that drive up cost without adding value. We believe that the supply chain needs to compress in response to more targeted therapies with smaller patient populations, so our model facilitates a more direct relationship between the drug innovator and the patient, the two constituents whose interests most naturally align. We provide a broad basket of services for biopharma companies on a fee-for-service basis instead of trying to make money on the sale of the drug. It’s efficient, it’s performance-driven and it eliminates potential conflicts.”

Dohmen was a major regional wholesaler dating back to the 1850s that sold its wholesaling operations to Cardinal Health in 2006. Leading up to that and since, it has focused on increasing its pharma services capabilities through DDN, a major distribution services company, DDN Medical Affairs, and through its acquisitions of MedComm and Centric. Dohmen also has a payer services division that operates a pharmacy-benefits management company (Restat) and PlanIT.

It remains to be seen how far Dohmen can reach with the business model it is executing. Some pharmacy benefit managers (PBMs) offer the same sort of transparency for their plan clients that Dohmen is proposing, but the business is dominated by the major players like CVS Caremark and Express Scripts, who don’t. The Big Three wholesalers, meanwhile, combine traditional drug purchasing with fee-for-service for distribution—and have a growing variety of specialty services as well. At the end of the day, manufacturers are looking for trading partners that can move market share. On the other hand, Dohmen has 64,000 pharmacies participating in the Align network that Restat operates—which points to some not-inconsequential market access itself.

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