“The following was obtained from the Hoover’s database provided by the University of North
Texas Willis Library, February 15, 2010.”
Administering some 580 million prescriptions each year, Medco Health Solutions is the country's top
pharmacy benefits management company and, through its
unit, its top specialty pharmacy
as well. The company assists health plans in managing drug costs by designing drug formularies,
negotiating discounts with pharmaceutical companies, and processing claims. Members may fill their
prescriptions through a network of about 60,000 pharmacies, a mail-order program, or the company's
Internet pharmacy. Medco Health Solutions manages drug benefits for clients that include unions,
corporations, HMOs, insurance companies, and federal employees.
Customer cost containment is the cornerstone of the company's business strategy. Medco Health
Solutions is able to control costs through the use of technology to process prescription claims, automation
to fill and distribute prescriptions, and volume purchasing of pharmaceuticals. It also encourages the use
of its mail order pharmacies and of generic equivalents in place of more expensive brand name drugs.
Medco's mail order business is a big part of this cost reduction strategy. With nine mail order pharmacies
scattered across the country, the company dispenses more than 100 million prescriptions a year. It uses
this scale to get better deals from suppliers and to force stricter compliance with health plan formularies.
Within its mail order pharmacies, Medco has instituted what it calls Medco Therapeutic Resource
Centers, which are specialized groups of pharmacists who are focused on certain chronic or complex
diseases. The company's $1.5 billion acquisition in 2007 of
, a mail-order distributor of blood-
glucose monitors to diabetes patients, strengthened its Therapeutic Resource Center model, giving it
resources dedicated to diabetes patients. Under a previous agreement, Medco had been supplying diabetes
drugs to PolyMedica's patients.
Medco continues to operate the diabetes supply business under PolyMedica's former Liberty Medical
brand. The company further enhanced the Liberty division when it bought the diabetes distribution assets
Access Diabetic Supply
for $63 million in 2009.
Another key component of the company's strategy is the growth of Accredo Health, which dispenses
sensitive biotechnology drugs, usually injectable or infusion drugs, to patients with serious diseases such
as cancer. Accredo delivers medications and related supplies either to patient homes or clinical sites from
three main distribution centers in Tennessee and Pennsylvania.
Medco grew its Accredo unit in 2007 with the acquisition of