As we've learned watching Shark Week this week on Discovery, apex predators respond quickly to weakness the proverbial blood in the water. A single drop of blood from an injured animal can draw hungry sharks from miles around seeking to feast on the wounded victim.

Last week's announcements that UnitedHealth Group was dumping Medco as its pharmacy benefit manager and Medco was fleeing to the arms of Express Scripts Inc. were the healthcare industry equivalent of blood in the water. Medco's recent losses, which include the CalPERS contract, spread to an open gash with UnitedHealth's decision to carve in its pharmacy benefit to OptumRx.

With its largest customer bolting, Medco sought safety in an alliance. However, like sharks in the ocean, a wounded animal is a prime target for attack. Prime Therapeutics the PBM equivalent of a tiger shark (not quite as big as a great white but pretty deadly nonetheless) may be taking another chunk out of Medco before its sale to ESI is completed. News outlets report that Blue Cross and Blue Shield of North Carolina may drop Medco in favor of joining Prime Therapeutics as a partial owner. That's a significant change that takes a further chunk out of Medco's backside.

Prime Therapeutics owned by the Blue Cross Blue Shield plans in Illinois, Florida, Texas and other states is the fifth biggest PBM in the nation, according to HealthLeaders-InterStudy data; the organization has been projected as an active mover in post-merger era (link to PBM Industry Rocks And Reels From Mega-Merger Talk). The North Carolina Blue plan's move could simply be the start of a feeding frenzy that leads Prime Therapeutics to tear away other Blue Cross Medco customers in Michigan, Pennsylvania and Washington.

While all eyes are on Prime Therapeutics, similar moves will be around smaller bull sharks MedImpact, CatalystRx (which has been incredibly active in the past year) and Argus. Perhaps more interesting will be moves by one of the great whites in this industry, CVS Caremark. As the No. 3 PBM behind both Medco and ESI, CVS Caremark stands to feast on what's discharged from the combined Medco-ESI company (either through poaching clients pre-merger as they did with the CalPERS contract or absorbing those clients that are spun off as part of DOJ-approved merger agreement).

Importantly, we've learned from Shark Week that great whites can sneak up on their prey by shooting straight up underneath them, managing to lift themselves out of the water. Maybe CVS Caremark is satisfied with taking chunks out of Medco, or maybe CVS Caremark could be planning a Polaris breech on the smaller sharks of the ocean  Future Scripts, SXC Solutions or MedImpact. Either way, the feeding frenzy is just starting; there's blood in the water and the sharks are hungry.

DRG becomes Clarivate

View Now