Abstract

The purpose of this paper is to present the case that the difference in profitability between Wellpoint’s PBM business and other PBM operations stems more from differences in business models than from differences in the efficiency of operations. And Express Scripts is paying a premium for Wellpoint’s business on the expectation that it will be able to convert (“decapitate”) some of Wellpoint’s fixed premium and ASO plans to more profitable benefits reseller plans.

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