KKR and WBA close PharMerica deal
Investment firm KKR and minority investor Walgreens Boots Alliance, based in Deerfield, Ill., on Thursday closed its acquisition of PharMerica, a provider of specialty pharmacy services.
The deal, first announced in August, was closed ahead of schedule. The all-cash transaction is valued at roughly $1.4 billion and will make PharMerica a private company. In connection with the completion of the acquisition, shares of PharMerica’s common stock will cease trading on the NYSE prior to the opening of the NYSE on Dec. 8, 2017.
“This is an opportunity to expand into a growing segment, and to do so through a national footprint,” Walgreens Boots Alliance co-COO Alex Gourlay reported in August. “As the healthcare landscape and patients’ needs continue to change, this is another way we can support quality, affordable patient care.”
PharMerica serves the long-term care, hospital pharmacy management services, specialty home infusion and oncology pharmacy markets through 96 institutional pharmacies, 20 specialty home infusion pharmacies and five specialty oncology pharmacies in 45 states.
UBS Investment Bank and BofA Merrill Lynch served as financial advisors to PharMerica and Davis Polk & Wardwell served as PharMerica’s legal advisor. Simpson Thacher & Bartlett and Weil, Gotshal & Manges served as legal advisors to KKR and Walgreens Boots Alliance, respectively.
AmerisourceBergen makes push to curb opioid diversion, misuse
Healthcare distributor AmerisourceBergen has reaffirmed its commitment to ongoing supply chain safeguards and announced plans to build partnerships in an effort fight opioid abuse and diversion.
The Valley Forge, Pa.-based company said that since 2007, it has provided the Drug Enforcement Administration with daily reports of all opioid-based medication orders that include quantity, type and receiving pharmacy, which it says has led to tens of thousands of stopped shipments of suspicious orders. It said it would continue to guard its supply chain by using data and analytics to analuze orders from customers against their peer groups to identify suspicious behavior. Additionally, the company said it was continuing to invest in its Diversion Control Team, which includes pharmacists, pharmacy technicians and former law enforcement professionals. The ream visits customer sites, conducts surveillance and reviews customer products, AmerisourceBergen said.
The company also noted that it remains commited to taking no action to market or creae demand for opioids, and that it has not provided incentive-based compensation or bonuses around the sale of opioids, nor does it have plans to.
“The commitments and initiatives announced today reflect our belief that all companies in healthcare should be constantly looking at ways to innovate, collaborate and enhance existing practices in order to best combat the opioid issue,” AmerisourceBergen president, chairman and CEO Steve Collis said. “Alongside our recent legislative recommendations aimed at supporting regulator and industry data transparency, these reflect our dedication to doing our part to combat diversion and misuse of opioid products.”
AmerisourceBergen said that it would work to find partnerships that will offer opioid abuse solutions. This is in addition to the company’s collaboration with Walgreens to bring safe medication disposal units to 900 Walgreens stores near military bases and other areas that have borne the brunt of the opioid epidemic.
The new initiatives follow the company’s November call for new guidelines surrounding data transparency between the DEA, drug distributors and pharmacies.
“Given the current silos within the supply chain, presently only DEA has access to comprehensive, critically needed data on the total quantities of opioids sold to pharmacies across the United States,” Collis said. “While distributors are individually required to report controlled substance data to DEA, we currently are not privy to if our peers in the industry are supplying opioid-based medicines to the same pharmacies we are. AmerisourceBergen is committed to working collaboratively to gain access to this data so that all distributors would be better able to detect suspicious orders, and ultimately help stop bad actors in their tracks.”
AmerisourceBergen’s suggestions included allowing distributors access to de-identified DEA data to help evaluate the context of a pharmacy’s opioid order, establishing additional protocols around opioid ordering and using DEA registrant fees to fund enhanced data capabilities, among others.
CMS reports slowed health spending growth
The Centers for Medicare and Medicaid Services have released new data from 2016 showing that upward trajectory of U.S. healthcare spending has slowed. The agency, in a report published in the January 2018 issue of Health Affairs that 2016 saw spending increase to 17.9% of U.S. gross domestic product. But that it only grew at a rate of 4.3% — down from the 5.1% and 5.8% spending growth rates seen in 2014 and 2015, respectively.
The rate of spending growth for 2016 is more in-line with the average of 4.2% growth seen between 2008 and 2015. CMS attributes the slowdown to a wider slowdown in spending growth for retail prescription drugs, hospital care and physician and clinical services. It also noted that private insurers, Medicare and Medicaid all saw spending slowed due to lower growth rates per enrollee. On a per-capita basis, spending grew at 3.5%, reaching $10,348 last year.
Private insurer spend increased 5.1% to $1.1 trillion in 2016 (roughly 33% of all health expenditures), which is a slowdown from the 6.9% growth seen in 2015. CMS said that a downturn in enrollment growth, as well as lower retail prescription drug spending. Medicare spending grew 3.6% to $671.2 billion in 2016, compared with 4.8% in 2015, while reporting stable enrollment growth. Per-enrollee spending also increased at a slower rate than 2015 — 0.8% compared with 2.1%. Medicaid spending hit $565.5 billion last year, making up 17% of all national health expenditures. Medicaid spend grew 3.9%, compared with 9.5% in 2015 and 11.5% in 2014. CMS attributed the spikes in past years to the initial impact of the Affordable Care Act’s expanded Medicaid eligibility and an increase in enrollment.
Retail prescription spending increased 1.3% in 2016, growing to $328.6 billion — roughly 10% of overall health spending. The growth is markedly lower than the 12.4% seen in 2014 and 8.9% in 2015, which CMS said was due to an influx of hepatitis C treatments on the market. The share of spending made up of retail prescription drug is similar to what it was in 2009, CMS said.
Among goods and services, retail prescription drugs saw the lowest growth rate, with physician and clinical services, which make up 20% of overall health spend, up 5.4% and hospital spending up 4.7%, making it 32% of all healthcare spending.
“Over the last decade, the US has experienced unique events that have affected the health care sector, including the most severe economic recession since the Great Depression, major changes to the health care system because of the ACA, and historic lows in medical price inflation,” said Micah Hartman, a statistician in the Office of the Actuary at CMS and lead author of the Health Affairs article. “In 2016, the slowdown in health care spending followed significant insurance coverage expansions under the ACA and very strong growth in retail prescription drug spending in 2014 and 2015.”
To read the full report, click here.