University of Pittsburgh Medical Center plans to sell its pharmacy operations to pharmacy management company CarepathRx for $400 million, the organizations announced Tuesday.
The deal rounds out CarepathRx's acquisition strategy, adding the back-office operations of UPMC's Chartwell subsidiary to its portfolio of infusion treatment oversight, specialty drug prescription optimization as well as medication management services for chronically ill patients. The health system will become an investor in CarepathRx when the transaction closes in an estimated 30 to 45 days.
About 85% of prescriptions are made in the hospital, but only 5% are filled there, which represents a missed opportunity in terms of revenue and medication adherence management, CarepathRx CEO John Figueroa said.
"If we build a company that would allow hospitals to keep all of the prescriptions and patient information connected to the EHR, you would have a quality of care never seen before and the financial opportunity for hospitals to keep prescriptions, instead of having them go out the door," he said.
Figueroa founded CarepathRx in 2019, along with private equity firm Nautic Partners. It focuses on improving medication adherence and treatment for the most vulnerable and costly patients.
UPMC's pharmacy operations is CarepathRx's latest addition to what it describes as an end-to-end model that connects the fragmented pharmaceutical sector.
CarepathRx acquired BioPlus Specialty Pharmacy, which is one of the largest of its kind in a market that's expected to reach $280 billion by 2021. More than half of the new drugs awaiting Food and Drug Administration approval between 2020 and 2021 are specialty drugs. It also purchased SemitaRx, which aims to optimize specialty prescription processing and patient outreach.
CarepathRx owns PipelineRx, which helps track pharmacy data via hospitals' EHRs. It also has ExactCare, which is a medication management company for the chronically ill, as well as ProHealth, which helps hospitals administer infusion treatment to patients at home.
In addition to improving patient share, CarepathRx looks to unify and integrate pharmaceutical dispensing processes across all sectors, boost eligible hospitals' 340B drug discount program metrics, improve medication adherence through real-time dispensing data and enhance revenue cycle management by adapting to insurer's coverage criteria, executives said.
"This type of end-to-end program improves hospitals' position to participate in value-based reimbursement models and continuity of care while allowing hospitals to capture profit across the entire continuum," said Keith Crawford, chief commercial officer of CarepathRx.
The company expects to hit $2 billion in revenue in 2021, Figueroa said, noting that it will look to contract with more integrated delivery networks. It currently works with around 600 hospitals.
Chartwell is a limited partnership between UPMC, Butler Health System, Heritage Valley Health System and Washington Health System that provides home infusion, specialty pharmacy and enteral nutrition. It will remain a standalone entity, but operate under new management, Figueroa said, noting that UPMC was particularly interested in CarepathRx's polypharmacy for the chronically ill.
"Around 45% to 50% of patients who are leaving the hospital have a chronic disease state or multiple chronic disease states. We help identify the chronically ill and white label the service (under the UPMC brand) so hospitals and patients stay connected," he said. "Chartwell's experience combined with our portfolio puts us in a unique position to take this expertise nationally to every IDN in country that wants to get into the comprehensive pharmacy business."
Health systems are looking for new ways to deliver care beyond the walls of a hospital to drive better outcomes at lower costs, said Chronis Manolis, chief pharmacy officer at UPMC Health Plan.
"Chartwell's agreement with CarepathRx will allow other health systems nationwide to benefit from the pharmacy model that UPMC has created, while delivering even better service for UPMC's patients and health plan members," Manolis said in prepared remarks.