Merck Case Study Analysis

The History of Merck and Medco For several years Merck & Company has discovered, developed, and brought patients medical vaccines that have changed the lives of patients worldwide. In 1993, the company made the decision to merge with Medco Contaminant Services Incorporated, one of the largest prescription bene±ts management companies in the United States of America (Weston, Mitchell, Mulherin, Pg. 124-125). Why was there a decision for Merck & Company and Medco PBM to merge the two companies? The answer seems simple. In the eyes of many analysts, the merger would eliminate the competition, and give Merck & Co. the ability to reach Medco’s huge database of consumers through their managed care institution business model. Though Merck & Co. has delivered innovative and superior marketing to high priced pharmaceuticals, they have only reached about 10 percent of the drug market in the United States. Operating as a managed care institution, Medco has contained costs and has captured 22 percent of the employer bene±ts market, o²ering prescription drugs at a discounted rate, through the employee prescription drug plan. Medco operated as a middleman and demanded discounts on pharmaceuticals due to the huge volume that was produced through the managed care institution. Merck rejected this business deal and eliminated the competition through the Medco Acquisition.

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