Inside This Issue - News
Court mulls legal challenge to PBM merger
April 23rd, 2012
PITTSBURGH – A federal judge heard arguments this month in the lawsuit seeking to stop the merger of Express Scripts Inc. and Medco Health Solutions Inc.
U.S. District Judge Cathy Bissoon did not say when she might rule on the action by the National Association of Chain Drug Stores and National Community Pharmacists Association (NCPA) to block the Express Scripts-Medco merger on anticompetitive grounds.
NACDS and NCPA have also asked that Bissoon order Express Scripts and Medco to keep their assets separate pending a decision.
Express Scripts lawyer Clifford Aronson said more than $230 million has already been spent to integrate the two PBMs, and that they have shared competitive information, according to Bloomberg News. Stopping the merger now would result in job cuts and lost customers because of uncertainty about the future, he said. “The injury to Express Scripts would be huge,” Aronson told Bissoon.
Meanwhile, the battle over the Federal Trade Commission’s refusal to block the merger has continued in the court of public opinion, with pharmacy advocates challenging an editorial praising the action, and consumer groups denouncing the deal.
The heads of NACDS and NCPA took The Wall Street Journal to task for an editorial headlined “Antitrust Enlightenment.” The editorial praised the FTC decision as a triumph for consumers.
In a letter to The Journal, NACDS president and chief executive officer Steve Anderson and NCPA CEO B. Douglas Hoey wrote, “Count us among those who salute free-market victories. However, the Express Scripts-Medco Health Solutions merger does not reflect such principles. The Federal Trade Commission’s split decision allowing the merger is no such victory.”
Anderson and Hoey said the editorial board ignored the tendency of middlemen to act contrary to health care transparency. “This lack of transparency affords little opportunity to verify exorbitant pharmacy benefit manager claims of cost savings or to dispute the sense that any alleged savings enhance their own profitability, rather than help consumers and employers,” they wrote.
“With fewer PBM alternatives, the merging company’s power would only increase, as would its ability to force patients to obtain prescriptions through its own mail-order service. This is a win neither for competition nor for consumer choice.”
Moreover, the lion’s share of innovation and success in boosting medication adherence and coordinating care has been fostered by community pharmacies, not PBMs, they added. “The status quo would be to view this merger according to the long-standing though disproved arguments that the middlemen use as a smokescreen. An enlightened view sees that free markets rely on freedom from such distortion.”
Consumer groups expressing disappointment with the FTC ruling include Consumer Federation of America, Community Catalyst, U.S. PIRG and the National Legislative Association on Prescription Drug Prices.
“There is simply no evidence that consumers stand to benefit from this transaction,” said Sharon Treat of the National Legislative Association on Prescription Drug Prices. “If history is any guide, this merger won’t lower prices and in fact will create the conditions where a dominant market participant is in a position to exploit consumers. Approving this deal seems like an awfully big gamble to take with American consumers.”
Former congresswoman Eva Clayton, chairwoman of the Preserve Community Pharmacy Access NOW coalition, said that while all communities will be hurt by the merger, “the elderly, the poor, minorities and those with special needs will be most severely affected.”
Last week, the Consumer Federation of America, National Consumers League, National Legislative Association on Prescription Drug Prices and U.S. PIRG filed submitted an amicus curiae brief in the U.S. District Court for the Western District of Pennsylvania in support of the lawsuit by NACDS and NCPA. The suit's plaintiffs also include nine retail pharmacy operators.