Aetna has revealed plans for a joint venture to provide specialty drugs to its members of its health plans with severe chronic illnesses while holding down costs.
The launch of Aetna Specialty Pharmacy, jointly owned by Aetna of Hartford, Conn. and Priority Healthcare of Lake Mary, Fla., will include a 45,000-square foot distribution center that is scheduled to open in 2005. No site has been selected for the facility, which eventually will employ 300 workers, but it will not be in Connecticut, Aetna said.
Hartford-based Aetna established a specialty pharmacy network in 2000 to provide drugs for patients with illnesses such as cancer, multiple sclerosis, cystic fibrosis and other severe chronic conditions.
Aetna Specialty Pharmacy will be Aetna’s exclusive preferred provider for specialty pharmacy distribution services. Priority Healthcare’s expertise is in the specialty pharmacy business, including clinical programs, personnel and proprietary technology.
The relationship with Priority Healthcare will allow Aetna to have better control of its specialty drug business, said Christian Miles, an analyst at A.M. Best Co. in Oldwick, N.J.
Specialty, or biotechnology drugs, are rising in cost much faster than typical prescription drugs or medical cost trends in general, Miles said.
The companies expect to move Aetna’s specialty pharmacy business to the new venture by the third quarter of 2005.
Terms of the agreement were not disclosed.
Aetna says its venture will help leverage buying power that should lead to reduced health care costs. Aetna spends more than $1 billion annually on specialty pharmaceuticals, which is growing nationally by more than 20 percent a year.
“This is a tangible result of Aetna’s commitment to strengthen our capacity to reduce medical costs, enhance the scope of our product and service capabilities and increase our ability to serve new market segments,” said John W. Rowe, chairman and chief executive of Aetna.
The new venture is consistent with Aetna’s strategy to avoid large-scale acquisitions, Miles said. “This is a really focused joint venture looking at a specific aspect of the medical cost trend,” he said.
The insurer reported last Thursday that second-quarter profits more than doubled to $286.3 million because of increased premiums and rising membership.
Aetna claims 13.4 million medical members, 11.4 million dental members, 8.1 million pharmacy members and 12.6 million group insurance members.
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