Pharmacy advocates are pressing ahead with a lawsuit to stop the merger of Express Scripts Inc. and Medco Health Solutions Inc. despite a judge’s refusal to grant a preliminary injunction freezing the transaction.


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Rx loses round in PBM lawsuit

May 21st, 2012

PITTSBURGH – Pharmacy advocates are pressing ahead with a lawsuit to stop the merger of Express Scripts Inc. and Medco Health Solutions Inc. despite a judge’s refusal to grant a preliminary injunction freezing the transaction.

On April 25 U.S. District Judge Cathy Bissoon rejected a motion from the National Association of Chain Drug Stores and the National Community Pharmacists Association (NCPA) to keep the pharmacy benefits managers’ assets separate pending a final decision on the deal. The Federal Trade Commission approved the $29.1 billion acquisition on April 2.

On March 29 NACDS, NCPA and nine Pennsylvania-based pharmacy operators filed suit to block the Express Scripts-Medco merger on antitrust grounds. The plaintiffs believe that they presented “a compelling argument for the court to issue a ‘hold separate’ order to suspend the combination of Express Scripts and Medco,” NACDS and NCPA said in a joint statement. “It is important to note that the judge has not yet ruled on the merits of the case or the motion to dismiss, so the case is ­continuing.”

Bissoon said in her ruling, “Because plaintiffs have not met their burden to establish the likelihood of immediate, irreparable harm that could be alleviated by the issuance of a preliminary injunction, their motion must be denied.”

The judge noted that Express Scripts and Medco began establishing a detailed integration plan as early as last summer. By the time the merger was approved, almost all of Medco’s senior management was gone, including the majority of its sales and senior supply chain managers, she said.

Express Scripts demonstrated that a temporary injunction “would result in a headless [Medco] that would likely be unable to survive on its own, much less compete” against Express Scripts, Bissoon said. “This, ironically, is exactly the harm that plaintiffs seek to prevent.”

Prior to the ruling, three consumer groups joined a nonpartisan organization of state legislators to submit a brief supporting the suit.

The Consumer Federation of America, the National Consumers League and U.S. PIRG joined the National Legislative Association on Prescription Drug Prices to argue that reduced competition for PBM services will boost drug prices for patients, and that the merger will reduce consumer choice of and access to pharmacies. They also said the deal will give Express Scripts dominance of the specialty pharmacy market, reducing access to care for vulnerable patients.

The coalition, whose lawyers include former FTC assistant director David Balto, noted in the brief that “consumers will be forced into PBM-owned mail-order operations and experience increasing health care costs through increasing PBM fees to plan sponsors. The savings that Express Scripts purports to acquire will not likely be passed on to ­consumers.”

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