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Diplomat Pharmacy buys LDI for $595 million

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Deal marks specialty pharmacy's 2nd PBM acquisition this month

FLINT, Mich. — Diplomat Pharmacy Inc. plans to acquire St. Louis-based pharmacy benefit manager LDI Integrated Pharmacy Services for in a $595 million cash and stock deal.

The move marks the second PBM acquisition this month by Diplomat, the nation’s largest independent specialty pharmacy. On Nov. 6, the company announced the purchase of National Pharmacy Services (NPS), an Omaha, Neb.-based PBM, in a $47 million in cash-and-stock transaction expected to close next month.

Phil Hagerman_Diplomat Pharmacy

Phil Hagerman

LDI brings URAC-accredited mail-order and specialty pharmacies, a national network of retail pharmacies and comprehensive clinical programs, building on the claims processing system and PBM capabilities added with the NPS acquisition, Diplomat said.

“Bringing on LDI is an even bigger step as Diplomat evolves from a specialty pharmacy provider to a broader health care company,” Diplomat chairman and chief executive officer Phil Hagerman said in a statement. “LDI expands Diplomat’s ability to meet growing demand from small and midsize health insurers, third-party administrators and self-insured organizations. We can give payors access to a robust specialty platform to manage this high-cost, fast-growing component of pharmacy benefits.”

Diplomat called the LDI acquisition “a strategic leap forward,” with Hagerman noting that LDI dramatically widens the scope of Diplomat’s PBM capabilities.

“We now field a leadership team with decades of PBM and specialty experience,” he explained. “The combined company will have the enhanced ability to serve middle-market payors hungry for a service model that helps patients achieve optimal well-being with complex therapies while delivering cost-containment strategies that impact pharmacy costs under both the medical and pharmacy benefit.”

Under the agreement, Diplomat will pay $515 million cash and $80 million in common stock to acquire LDI, which is expected to total about $388 million in sales for 2017. The transaction is slated to close in 30 to 60 days.

“With 90% of traditional medications now filled as generics, it’s specialty pharmacy costs that are driving pharmacy spend for payors,” according to Diplomat President Joel Saban. “To offer real solutions to today’s challenges, a new model with a diverse set of assets is needed. The need for specialty benefit management solutions has never been more urgent. Deep clinical expertise across therapeutic categories, a network of home infusion providers, advanced data analytics platforms and trusted industry relationships are all critical.”

Joel Saban_Diplomat Pharmacy

Joel Saban

Diplomat has the rights to dispense about 100 limited-distribution drugs, more than any other independent specialty pharmacy, Saban said. “This access positions us to provide an enhanced breadth of service to the LDI client base,” he added. “Authority to distribute these drugs requires extensive data collection and monitoring capabilities, proven patient support programs and strong relationships with pharmaceutical manufacturers — all strengths of Diplomat.”

LDI’s integration with Diplomat will better enable the companies to capitalize on opportunities to help health care payors control escalating specialty drug and related care costs, according to Len Dino, CEO of LDI.

“With the added resources of Diplomat, LDI can make a dramatic impact for our clients while increasing members’ access to life-saving therapies,” Dino stated. “We’ll continue to build upon our 50-year legacy of transforming how pharmacy care is delivered.”

Today’s specialty pharmacy benefit market is underserved, added LDI chief operating officer Albert Thigpen. “The combined company will fill these gaps — creating synergy across specialty pharmacy, pharmacy benefits and infusion therapy — and we’re excited to provide the missing link,” he explained. “With LDI’s leading-edge technology platform, we will educate and empower patients to better manage these complex therapies while bringing clients innovative approaches in specialty benefit management.”


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