St. Louis, MO – St. Louis-based prescription benefits manager Express Scripts says it will spend nearly $4.7 billion to buy out the pharmaceutical benefit subsidiaries of a major health insurance company.
Express Scripts is using a mix of cash and stock to buy NextRX - the pharmacy benefits subsidiaries of health insurance giant WellPoint. The agreement also includes a 10-year contract for Express Scripts to manage WellPoint's drug benefits.
Edward Jones analyst Steve Shubitz says the deal marks a major expansion for Express Scripts.
"The increased scale that they're going to have will allow them to lower their drug purchasing costs which will help for the NextRX business and also just for their remaining business," Shubitz said.
Shubitz says the ten-year contract is longer than usual.
"I think this is something that Express Scripts really wanted because if they were going to spend a lot of money in acquiring access to these 265 million prescriptions annually that NextRX processed, they wanted some type of assurance that this business wouldn't just walk away."
The companies expect the deal to close in the second half of the year. It still needs the approval of federal regulators. If approved, Express Scripts would become the second-largest prescription benefits management company in the country.