It is probably now fair to say that pharmacy benefit management has disappointed many of the drug company executives who were looking to it as a way of securing market share and growth in a tightening marketplace. A number of Merck & Co. Inc. managers have always believed the company overpaid in its $6 billion acquisition of Medco Containment Services Inc. and have seen nothing to make them question their original judgment. Sighs a top executive at a PBM buyer: "Disease management has gone from the great hope of the drug business, the thing that would save margins, to a sustainable way of generating revenues in areas where drug companies have products and therapeutic interests." Since Eli Lilly & Co. Inc.'s $4 billion acquisition of PCS in July 1994, no drug company has ventured into the PBM business through an acquisition.
But new companies have ventured into the world of PBMs through alliances with drug-company owned PBMs as part of separate...