The National Association of Chain Drug Stores and the National Community Pharmacists Association (NCPA) have filed a lawsuit to block the merger of pharmacy benefit managers (PBMs) Express Scripts Inc. and Medco Health Solutions Inc.

National Association of Chain Drug Stores, NACDS, National Community Pharmacists Association, NCPA, lawsuit, Express Scripts, Medco Health Solutions, merger, pharmacy benefit managers, PBMs, U.S. District Court for the Western District of Pennsylvania, Federal Trade Commission, FTC, Steve Anderson, B. Douglas Hoey, pharmacy operators, Don Dell, Jennifer Mallon, retail community pharmacies, retail pharmacy, Klingensmith Drug, Hometown Pharmacies, mail-order prescriptions, Geoff Walden

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Pharmacy groups sue to block PBM merger

April 9th, 2012

PITTSBURGH – The National Association of Chain Drug Stores and the National Community Pharmacists Association (NCPA) have filed a lawsuit to block the merger of pharmacy benefit managers (PBMs) Express Scripts Inc. and Medco Health Solutions Inc.

The suit, which was joined by nine pharmacy operators, was filed in the U.S. District Court for the Western District of Pennsylvania four days before the Federal Trade Commission approved the merger. A day later NACDS and NCPA filed a motion for a temporary restraining order to hold up the deal until the court rules on the suit.

“The evidence will demonstrate that the merger will result in a PBM with just too much market power over patients and pharmacies and plans,” NACDS general counsel Don Bell said during a conference call discussing the action. “We will show that the merger needs to be stopped.”

NCPA general counsel Jennifer Mallon said the associations had no idea how the FTC would rule on the deal, “but we believe that legal action is the next logical step in our kind of multi­pronged strategy to opposing the merger.”

Bell said NACDS and NCPA “believe that the potential harm to retail community pharmacies and patients is so great that we want to ensure that the potential anticompetitive impacts of this proposed merger are reviewed by a court.”

NACDS president and chief executive officer Steve Anderson said retail pharmacy is employing “an all levels, all branches of government strategy to protect patients” and its industry. He said the merger would have “dire consequences” for pharmacies and patients.

The deal, he noted, would force sponsors into accepting plans that divert patients from “the face-to-face pharmacy services” they “prefer and receive from retail community pharmacies to Express Scripts and Medco’s proprietary mail-order facilities.”

The lack of competition in the provision of pharmacy benefits management services would also allow the merged entity “to force sponsors and patients to accept formularies weighted toward expensive brand name drugs as well as other expensive drugs sold by Express Scripts and Medco’s specialty pharmacies,” said Anderson.

There is no evidence that the savings promised by the PBMs from the merger would be passed on to consumers and employers, he added.

B. Douglas Hoey, chief executive officer of NCPA, said the merger “would shrink the Big Three to just two major PBMs and leave one clear loser and that’s the American people.”

He noted that the merged entity would control more than half of specialty pharmaceutical sales, preventing new competition and enabling it “to strike sweetheart deals with manufacturers that could increase overall costs.”

The acquisition of Medco by Express Scripts would create the largest mail-order pharmacy in the nation, accounting for close to 60% of all mail-order prescriptions, Hoey pointed out.

“Community pharmacists are already over a barrel in negotiations with the Big Three PBMs,” he said. “In order to continue serving our patients, pharmacy small business owners must deal with ‘take it or leave it’ contracts that are laced with onerous terms and poison pills. This merger would send that proverbial barrel straight over the cliff.”

After a merger, “all of retail pharmacy would be forced to contract with ESI-Medco regardless of the terms,” Hoey added.

Bell said the merger would create “a huge new middleman that stands between patients and their pharmacies.”

He said Express Scripts-Medco would control access to medications for some 155 million Americans — about half the nation’s population. “As a result, they would control an enormous share of the market for purchasing prescriptions and services from retail community pharmacies.”

He noted, for example, that the merged entity would control about 60% of the prescriptions of Klingensmith Drug Inc. and of Hometown Pharmacies’ revenue — two of the plaintiffs in the lawsuit.