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Merck-Medco: Vertical Integration in the Pharmaceutical Industry  The US pharmaceutical industry changed dramatically in the early 90s when major pharmaceutical manufacturers acquired distribution intermediaries called Pharmacy proceeds Managers (PBMs). These PBMs provided services to large self-insured employers, insurance carriers, and others that provided prescription drug reportage to their employees, retirees, or members. PBMs were able to manage the cost of drug benefits, ameliorate the routine of prescription drugs, and improve patient care. In 1993, Merck purchased Medco for $6.6 billion, acquiring 38 million patients. Merck and Medco saw this acquisition as jimmy adding by integrating the functions of R & D, manufacturing, and distribution in order to effectively execute operations. PBMs such as Medco too provide cost and utilization services, claims processing, develop and maintain a network of providers, and benefit program design output. PBMs spend formularies to table service control the customers drug costs by encouraging the use of formulary drugs through compliance programs; limiting the number of drugs a plan covered, or developing financial incentives that encouraged the use of formulary products.

Second, PBMs use drug utilization reviews to enhance the role of pharmaceutical care and to potentially generate savings. Finally, PBMs use the drug use control function of health management. While PBMs had a modest preserve on distribution flow, PBMs did significantly impact the financial and information flows. The purchase of Medco would create coordinated pharmaceutical careâ€"improving the use of pharmaceuticals. Like any upright piano integration, the marriage of these two companies is not without its challenges. Tools to identify the key issues embroil competitive analysis, an assessment of the strengths and weaknesses of current and potential customers. This will fleet Merck-Medco an offensive and a defensive strategy to identify their proclaim strengths and... If you want to get a full essay, order it on our website: Ordercustompaper.com

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