A subsidiary of Merck & Co. will acquire a small Torrance, Calif.-based pharmacy-benefit manager for about $67 million.
Merck, a drug manufacturer, bought a much larger benefit manager, Medco Containment Services, in 1993 for $6.6 billion. Shortly after, two other drug companies made similar acquisitions.
Benefit managers are hired to minimize health plans' drug expenditures and encourage better prescription use. Among other cost-control steps, they urge physicians to prescribe from formularies, which list drugs considered most cost-effective.
Critics contend benefit managers push the products of their drug-company owners.
Merck last year agreed to modify its behavior under a settlement with 17 states. For example, Medco pharmacists will identify the company as a Merck subsidiary when they call physicians to request prescription changes (Oct. 30, 1995, p. 4).
Meanwhile, a recent General Accounting Office report urged the Federal Trade Commission to continue monitoring the competitive impact of the deals.
Medco is now Merck-Medco Managed Care, based in Montvale, N.J. Merck-Medco will acquire Systemed, the California firm, for $3 per share.
The deal is subject to antitrust review. A Merck-Medco spokesman said he didn't know when pre-merger notification documents were filed with federal authorities.
Systemed manages drug benefits for 2.6 million people. It earned $4.3 million on sales of $152 million in 1995.
Merck-Medco manages drug benefits for more than 47 million people.