Medco Health Solutions, Celesio join to help relieve financial burden on healthcare payors across Europe

Jun 21 2010

Medco Health Solutions, Inc. (NYSE: MHS) and Celesio AG, two of the world's leading pharmacy-driven healthcare companies, today announced a joint venture with a long-term goal of improving patient health and helping to relieve the crushing financial burden on healthcare payors across Europe.

Headquartered in Amsterdam, the 50/50 joint venture, Medco Celesio B.V., combines Medco and Celesio's strengths in pharmacy-driven clinical care.  Medco Celesio B.V. will target patients with chronic or complex conditions, such as diabetes, asthma, high-cholesterol and heart disease.  It will concentrate on innovative, integrated clinical services designed to improve patient adherence, integrate care across multiple providers, enhance safety and deliver greater value across the healthcare system.

"Our portfolio of proven clinical solutions can be customized to address the growing demand for affordable, high-quality care that is relevant across geographic, regulatory and cultural boundaries.  Although this will not eliminate every financial issue facing the European healthcare systems, these efficiencies represent a significant part of the overall solution," underscored Medco Chairman and CEO, David B. Snow Jr.

The joint venture is initially planned to go into operation in Germany in 2010, including the collaboration of the parent companies' respective mail-order pharmacies, DocMorris and Europa Apotheek Venlo.  It will then extend rapidly in phases to the major European markets, including the U.K., France, Spain and Italy.  Over time, it is planned to expand its geographic footprint into all 27 EU member states plus Switzerland and Norway, following market needs and enabling regulations.

While there are significant differences in the regulatory environments and healthcare systems across European countries, the challenges related to resolving the cost and quality issues are common – and so, too, are many of the solutions.

A New Approach to Address Quality and Cost

Medco Celesio B.V.'s business model will initially consist of three comprehensive service offerings, customized for each market and focused on improving care for patients with the greatest need:

• Suite of advanced clinical solutions. Medco Celesio B.V. will offer analytical insights enabling payors (including national health agencies, sick funds, and other authorized entities) to identify and correct clinical issues and monitor the effectiveness of their healthcare programs.  By deploying new technology tools and support systems, Medco Celesio B.V. will advance the role of pharmacy in healthcare by helping payors and providers – including physicians, nurses, pharmacists and healthcare counselors – to improve their services for patients.  At the same time it will provide sustainable cost management.
• Intensive, personalized care services addressing expensive new "specialty" and "biotech" medicines.  Medco Celesio B.V. will provide care for patients who are taking medicines that are considered "biologics" – these medicines are very expensive, difficult to administer and often require special handling.  This service supports patients by helping to ensure that these medicines are taken appropriately per the healthcare provider's direction and, therefore, provide the greatest benefit possible.  
• Modern, efficient, delivery infrastructure.  Medco Celesio B.V. will coordinate the most efficient and cost-effective care-delivery systems by offering convenient mail-order pharmacies as an appropriate complement to retail pharmacy services, in-home nursing support to help ease the burden on hospitals, and telephone patient counseling so that pharmacy assistance is immediately accessible to patients any time of any day.

Addressing Critical Healthcare Issues Through Advanced Pharmacy

Faced with an aging population and increasing costs associated with innovative treatments and technologies, healthcare spending in many European countries has reached almost 10 percent of national GDP and the rate of growth continues to accelerate.

"Chronic diseases are increasing with an alarming speed all over the world and they are associated with more than three-quarters of the overall healthcare burden.  Healthcare, especially for chronically ill patients, is therefore going to be a big social, political and economic challenge.  If we do not tackle these challenges in an appropriate way it could affect both the quality of life for chronically ill patients and economic growth in Europe.  So it is obvious that there is a strong need for new integrated solutions across Europe ensuring high quality of care, while reducing costs for the healthcare systems," said Celesio CEO Fritz Oesterle.

Statistics show that within the first year of treatment more than half of all patients in the United States abandon their prescribed therapy.  In other cases, medicines that should be prescribed in accord with the latest treatment guidelines are not ordered.  In Germany, for example, every fifth medical prescription is not filled at a pharmacy.  In Europe, the costs of poor patient compliance are estimated to amount to 200 to 300 billion Euros per year.  This is, among other factors, because patients are often hospitalized when their condition -- which could have been stabilized by being adherent -- further deteriorates.

Medco has been offering a broad portfolio of advanced, clinically driven services in the United States very successfully for many years.  In diabetes care, for example, Medco studies in the U.S. have shown that implementing advanced pharmacy techniques reduces overall per-patient medical spending by nearly 50 percent, as adherence improves, largely by reducing the need for hospitalizations.

The joint venture will cooperate closely with health policymakers, funding bodies, pharmacies, health care providers and their umbrella organizations, producers of pharmaceuticals, patients' associations and leading research institutes.

"We will strive to earn a position as the trusted partners of healthcare payors, as they achieve a financially sustainable model for providing needed access to quality care.  We will serve to advocate for patients, who through our extended services will become empowered, educated and active participants in their care," said Snow.  "We will become a resource for medical practitioners, who are relieved from bureaucratic tasks and can focus on treating their patients using the latest evidence-based protocols.  We will help retail pharmacies by delivering advanced safety systems and consultative tools that will help them achieve higher patient compliance.  And we will support pharmaceutical manufacturers to demonstrate increasing value by reaching the most appropriate patient groups with the most effective medicines."

The joint venture is an important strategic step for both Celesio and Medco to speed entry into new markets with important new clinical services.  The legacy businesses of both parties, however, are not included as part of this joint venture.

"The healthcare markets provide innovative companies with immense growth-potential.  Medco's clinical solutions combined with Celesio's pan-European reach and healthcare expertise provide much needed solutions for some of the most pressing problems in the European healthcare systems," said Oesterle. "The joint venture's businesses integrate the competencies of both companies into innovative, efficient solutions for the benefit of patients and payors.  At the same time, it will also give new opportunities to the business of our existing customers as potential partners cooperating with the joint venture."