Abarca Health and LucyRx – two privately held independent pharmacy benefit management companies – have agreed to merge as an alternative to the nation’s largest PBMs and as the public seeks better prescription drug prices.
The combination of Abarca and LucyRx will create a pharmacy benefit management business that will serve more than 9 million plan members across the U.S. in a deal designed to “create the only modern, independent pharmacy benefit manager with the scale, technology, and track record to credibly serve commercial and government clients of any size,” the companies announced Wednesday.
The Abarca-LucyRx deal will put the combined company in the top 10 PBMs when it comes to number of prescriptions managed but still far smaller than the three largest PBMs that control 80% of the U.S. market. Those three are: CVS Health’s Caremark; Express Scripts, which is owned by Cigna; and OptumRx, which is owned by UnitedHealth Group.
“The market today doesn’t have a lot of choice,” LucyRx chief executive officer David Blair said. “Now, we’re providing the market a clear alternative to the traditional PBM model.”
Abarca and LucyRx executives say they will be a stronger combined business “for commercial and government scale” while also bringing more competition to the market by operating in a more transparent way given they aren’t part of larger companies that also own health insurers, pharmacies or other providers of medical care.
“They are vertically integrated and have many conflicts of interest,” Abarca chief executive officer Jason Borschow said of the three largest PBMs.
Pharmacy benefit managers work as middlemen of sorts between insurers, pharmacies, and drug manufacturers to negotiate drug prices and manage prescription benefits.
Lately, however, they have been under unprecedented scrutiny with practically every state in the country, along with the U.S. government, looking at PBM business practices while transforming regulations and pushing for greater transparency. The big three PBMS, in particular, have been subject of a Federal Federal Trade Commission inquiry into anticompetitive behavior that government attorneys say resulted in inflated drug prices. The companies have denied the allegations.
Meanwhile, pharmacy is the fastest growing component driving employer and worker health costs.
“The timing is intentional,” Abarca and LucyRx said in a joint statement. “The PBM market is at a breaking point shaped by a new regulatory paradigm, sustained pressure from high-cost specialty drugs and GLP-1s, and clients demanding a different kind of PBM relationship—one that delivers more flexibility, true accountability, and sustainable affordability. Employers, consumers, and healthcare providers deserve a better experience.”
The Abarca-LucyRx combination will put the companies in all 50 states once it closes with complimentary businesses that currently have “zero overlap,” the companies said. LucyRx, which has about 1.6 million members, manages pharmacy benefits for more than 4,000 clients across the country including mid-sized employers and unions with about 400 to 500 workers while Abarca’s client base consists of about 7.5 million members via health plans and government health programs.
Both Abarca, which is based in San Juan, Puerto Rico, and LucyRx, which is based in Bethesda, Maryland, will retain their brands and operate as wholly owned subsidiaries of a company called Healthcare Revolution Partners once the deal closes in the third quarter of this year, pending regulatory approvals. Financial terms of the transaction weren’t disclosed.
“Leveraging our combined scale, technology, and track record, we will accelerate the healthcare revolution Abarca started more than 20 years ago,” Blair said. “Together, we will deliver a trusted operating foundation, tailored customer experiences powered by best-in-class technology, and total-cost-of-care savings anchored in putting patients first.”
Blair and Borschow will continue to serve as CEOs of their respective companies and become co-chairs of Healthcare Revolution Partners once the deal closes.
“LucyRx shares our vision of making healthcare more seamless and personalized for everyone,” Borschow said. “We look forward to leveraging LucyRx’s clinical capabilities, Connected Specialty Care Network, and expertise serving employers and labor groups nationwide to deepen our service offerings and accelerate our entry into new market segments.”
Abarca grabbed headlines two years ago when it was named as a participating partner in the launch of Blue Shield of California’s drug benefit venture with Amazon Pharmacy. In what Blue Shield has called its “Pharmacy Care Reimagined Initiative,” the venture officially began business last year.
When the venture was first announced in August of 2024, it sent the stocks of the owners of the nation’s largest managers of pharmacy benefits plummeting when Blue Shield confirmed it was dropping CVS Health’s Caremark and going its own way. Other stocks also took a tumble that day, including the share price of Cigna and the stock of UnitedHealth Group.
