If the mergers encourage the development and utilization of patient information, the potential benefits of lowered overall health costs should be recognized. By stressing the greater cost-effectiveness of drug treatment as compared to other health care products, such as doctor visits, disease state management could be a form of enhanced interbrand competition among pharmaceutical companies, hospitals and other health care providers. Indeed, health maintenance organizations hold far more complete treatment information than distributors and are quite willing to share it for relatively small consideration. If patient information is an insufficient justification for PBM mergers, the acquired companies must have offered something more. By placing these mergers in the context of changes to the pharmaceutical industry generally, it becomes apparent that what the PBMs offered manufacturers was a better chance for success in the managed care world of the future.
Consolidation is widespread throughout the pharmaceutical industry.
American Cyanamid Co. In January, Glaxo Plc. made a surprise bid for Wellcome Plc., its British rival. Many analysts consider this pattern of consolidation the beginning of a general contraction of the pharmaceutical industry from its present 40 or so companies to perhaps four or five. In light of market flaws which have removed the ultimate consumer from appreciating the full costs of prescription drugs in the past, it is likely that the pharmaceutical industry simply contained more companies than a competitive market could support, and the pharmaceutical manufacturers acquired the PBMs in an attempt to diversify and enhance their chances of survival in the changing market. This is our future. Some industry analysts characterize the manufacturer acquisitions of PBMs as the first step in moving away from a product orientation to a service orientation.