Shields Health Solutions, the Stoughton specialty pharmacy company, said Tuesday it acquired ExceleraRx Corp., its main competitor, in a deal that will increase its leverage with drug makers and companies that manage prescription plans for employers and insurers.
The buyout, the first by Shields Health, expands its reach to more than 65 health care systems with 700 hospitals in 43 states, the companies said in a statement. While Excelera doesn’t have a significant presence in New England, among its partners in the region are Mass General Brigham, the largest hospital network in Massachusetts, and Yale New Haven Health.
The privately held companies, which were both launched in 2012, didn’t disclose terms of the transaction. But they said five of Minneapolis-based Excelera’s founding health systems have become investors in Shields Health.
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Shields Health is the larger company, with revenue running at about $1 billion a year and 1,000 employees. The merged company is expected to reach a $2 billion revenue rate next year, executives said.
Shields Health and Excelera were among the first companies to work with hospitals across the country to establish onsite specialty pharmacies, focusing on treatment areas such as oncology, neurology, rheumatology, and diabetes. They create programs to coordinate patients’ care, help them understand their treatments, and assist with payments and appointments.
Unlike most medications available at local pharmacies, specialty drugs often need to be administered by highly trained pharmacists. They can easily cost hundreds of thousands of dollars a year, and many are available only through specialty pharmacies.
For Shields and Excelera, breaking into this market hasn’t been easy, because the pharmacy benefit managers, or PBMs, that typically have access to these medications are powerful gatekeepers that often call the shots on which drugs are available and at what cost. The three biggest PBMs are CVS Health, Express Scripts, and UnitedHealth.
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“Eight years ago we couldn’t get PBMs or drug manufacturers to talk to us,” Jack Shields, who quit his job as president of his family’s medical imaging business to start Shields Health, said in an interview.
With the addition of Excelera, Shields Health will be able to increase its clout with PBMs and pharmaceutical companies, he said.
The company’s pitch to hospitals is that its programs can improve care and lower costs, in part by eliminating PBMs and third-party pharmacy managers. Shields said the company has reduced the time it takes patients to get specialty drugs from several weeks to about two days, and cut average copays from hundreds of dollars to $10.
The companies have pursued different business models. Excelera, which has 30 employees, teaches hospital staff how to run the specialty pharmacy. Shields employees work on site to help patients obtain therapies, including doing much of the paperwork. They also monitor treatment plans.
In July 2019, Shields Health sold a combined ownership stake of about 50 percent to drug store giant Walgreens Co. and investment firm Welsh, Carson, Anderson & Stowe in a deal valued at between $850 million and $900 million. Walgreens is part of Walgreens Boots Alliance, which also owns a pharmacy benefits manager that serves 17 Blue Cross Blue Shield organizations, 200 pharmacies located at health care providers, and a specialty infusion company.
Before the Excelera acquisition Shields Health had about 40 health systems on board, including UMass Memorial, Baystate Health, and New York Presbyterian. After combining with Excelera, clients of Shields Health will account for nearly 30 percent of patient revenue generated by all nonprofit health systems, according to Stephen West, the company’s chief strategy officer.
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Excelera’s clients are located throughout the Midwest, Mountain States, Southwest, and Florida and California. The addition of local powerhouse Mass General Brigham, the largest health system in Massachusetts, is an added bonus for Shields Health.
“We are excited about it,” West said.
Correction: Due to incorrect information provided to The Boston Globe, an earlier version of this story misstated the number of Excelera employees. The company employs 30 people.
Larry Edelman can be reached at larry.edelman@globe.com. Follow him on Twitter @GlobeNewsEd.