Medco brings US-style pharmacy-benefit services to Europe with j.v. with Celesio

June 24, 2010
Pharmaceutical Commerce, Pharmaceutical Commerce - May/June 2010,

Joint venture combines two leading “pharmacy driven” companies to open up service sector in Europe

The two companies, Medco Health Solutions (Franklin Lakes, NJ) and Celesio AG (Berlin)—both leading pharmacy services companies in their respective regions—have announced a 50-50 joint venture, Medco Celesio BV, to be headquartered in Amsterdam and to be operational in Germany this year, and then gradually throughout the European Union plus Norway and Switzerland. Such cross-border initiatives are rare among pharma distributors (although the Big Three US wholesalers each has a Canadian arm, and many of the larger European wholesaler-distributors have operations in multiple EU member nations). The venture has the potential to shake up many existing distribution and service relationships in Europe, just as PBMs generally (and Medco in particular) have been shaking up the US scene.

Medco is primarily a pharmacy benefit manager, with a substantial mail-order business. Celesio has three businesses: wholesaling; manufacturing logistics services; and retail pharmacy (it owns 2,300 pharmacies). The stated purpose of the j.v. is to provide “pharmacy-driven clinical care” for chronic or complex conditions, through three service offerings:

  • Advanced clinicial solutions for payors and providers, including physicians, nurses, pharmacists and healthcare counselors;
  • Personalized care services for specialty pharmaceuticals, such as injectables that require the intervention of healthcare professionals;
  • Care delivery services, including mail order, in-home nursing and telecommunications support.

For manufacturers, the j.v. will probably be something of a wash. On the one hand, one of the services that the companies’ press release emphasized is improving medication adherence, which would ostensibly raise pharmaceutical consumption. On the other hand, the press release also noted that the j.v. “will provide sustainable cost management” of chronic and complex diseases for payors, which implies the same drive toward generics and pharmacoeconomic analysis that Medco practices in the US. Of particular interest should be how the j.v. will accommodate delivery of specialty pharmaceuticals, which—in the US at least—combine medical and drug reimbursements, and have the potential to carve into hospitalization and physician-treatment services.

The j.v. probably will not alter existing patterns of drug distribution between the US and Europe. Through an earlier acquisition, Medco already has a PBM subsidiary in Europe, and Celesio is plenty big enough to already have international logistics services for obtaining US drugs for intraEuropean distribution (or for getting European drugs to the US market).

In recent months, Medco has been pioneering a variety of methods to tailor pharmacy to individual patients, including biomarker analysis. At the very least, the j.v. now has the potential to include millions of European patients as well as US patients in its studies.