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H.D. Smith, AAP agree to merge PSAOs

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SPRINGFIELD, Ill., and PHOENIX — H.D. Smith and American Associated Pharmacies (AAP) plan to combine their pharmacy services administrative organizations (PSAOs) into a stand-alone PSAO entity.

The companies said Monday that the joint venture, to be called the Arete Pharmacy Network, will merge H.D. Smith’s Third Party Network and AAP’s United Drugs and serve more than 2,300 independent retail pharmacies nationwide.

Arete Pharmacy Network logo_small

The combination of Phoenix-based United Drugs and Springfield, Ill.-based Third Party Network will focus on managed care contracting and expanding tools and services, enabling pharmacies to deliver quality care as a differentiator in their communities, according to AAP and H.D. Smith.

“We approached this business opportunity with the goal of helping pharmacies improve Star Ratings and other quality metrics by joining together and gaining efficiencies of scale,” Rob McMahan, president of United Drugs and chief executive officer of Arete Pharmacy Network, said in a statement. “This partnership allows each of us an expanded presence throughout the United States and enhanced capabilities that will make us a partner of choice for PBMs, plans and other payers.”

H.D. Smith, the nation’s largest privately held drug distributor, and AAP, the nation’s largest member-owned PSAO, emphasized that their combined capabilities position Arete Pharmacy Network as a key voice and negotiating force for independent retail pharmacy.

“Sustainable success within an evolving health care market requires us to provide enhanced value to our pharmacies and the patients they serve, and Arete Pharmacy Network will do just that,” stated Dale Smith, chairman and CEO of H.D. Smith Holding Co. and chairman of the Arete Pharmacy Network. “Our shared commitment is to support and improve patient health by ensuring access to payer contracts and helping independent pharmacies create better patient outcomes. Greater outcomes, with a plan to maximize efficiencies and effectiveness, will enable Arete Pharmacy Network to deliver more than the parent organizations were able to deliver alone.”

Arete Pharmacy Network will help community pharmacies bolster Star Ratings, educate and reinforce medication compliance, address underpaid claim reimbursements, provide audit protection and ensure all payments are processed to pharmacies as quickly as possible.

“The formation of Arete Pharmacy Network is the first step towards aggregating the nation’s premier independent pharmacies into a high-quality, cohesive PSAO,” commented Greg Mitchell, chairman of the AAP board. “Together, we provide a broad-reaching network, enabling patients to receive the level of care they deserve from their local independent pharmacy.”


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