When an American checks out at the pharmacy, she pays two to six times the price for her prescription drugs compared to the rest of the world. Unsurprisingly, 83% of adult Americans describe prescription prices as “unreasonable.” Multiple companies have risen to meet this challenge – all while reaping returns for their investors.
In a bid to further profit from reducing the cost of prescription drugs, GoodRx Holdings, Inc. has agreed to acquire vitaCare Prescription Services, Inc. for $150 million in cash. Expected to close in the middle of 2022, “this acquisition will enable GoodRx to help more patients receive their prescriptions in an efficient, affordable, and transparent manner, and stay on their prescribed therapies as long as appropriate,” according to the companies’ press release.
Structured as a stock purchase, the deal was announced just days after GoodRx disappointed the market by falling short of analysts’ revenue and growth estimates. GoodRx’s CEO Doug Hirsch pointed to the lingering effects of the covid-19 pandemic, stating “The closure of some medical offices and hesitation from consumers to see a doctor during the pandemic resulted in fewer prescriptions and refills over the last two years.”
As one of the few countries in the world without prescription drug price controls, the United States faces some of the highest prices in the developed world. Due in large part to this fact, half of the 500 million brand prescriptions written each year go unfilled.
Source: https://www.nytimes.com/2018/11/12/upshot/why-prescription-drug-spending-higher-in-the-us.html
The pharmaceutical industry and proponents counter, “[i]t is important to recognize that the U.S. market supports most of the global innovation in drug development. It is no coincidence that we have the most vibrant, creative and successful biopharma industry in the world in the U.S. – and that patients in the US benefit hugely from this innovation.” And over half of all new drugs developed are from the U.S. market.
Both GoodRx and vitaCare seek to capitalize on this state of affairs by enabling consumers to comparison shop for drugs. They depict the prices for these medications across various drugstores in the user’s vicinity – empowering consumers to find lower prices. But while GoodRx has focused on generic drugs, vitaCare broadens the company’s reach because it has focused on brand name medications. The companies make their money by receiving payments from “pharmacy benefit managers” (i.e. the middle men between drug manufacturers and retailers) for referring the customer.
According to Matterhorn’s comprehensive M&A database, which harnesses AI to track current and historical deals, GoodRx was advised by law firm M&H, LLP. vitaCare was advised by law firm DLA Piper and financial adviser Locust Walk.
