Inside This Issue - News
FTC will take close look at big PBM merger
September 26th, 2011
WASHINGTON – The Federal Trade Commission’s request for more information on the planned merger of Express Scripts Inc. and Medco Health Solutions Inc. has opponents hoping the deal will be scuttled.
Express Scripts says it expected the FTC’s request, and both companies have vowed to work with the agency. Express Scripts and Medco say they remain confident the deal will close next year.
Investors have been less sanguine, driving down the price of Medco shares below the $17.36 a share contained in the $29.1 billion cash-and-stock offer that Express Scripts made in late July.
The FTC’s second request doesn’t necessarily preclude the acquisition from going through, but it means the government sees the deal raising significant antitrust issues. Still, it could be cleared if regulators are assured that savings will be passed on to consumers — especially in light of the economy and the cost of health care.
Express Scripts and Medco have said the combination would cut drug costs by reducing waste in the system and improve health outcomes.
Various retail organizations applauded the FTC. “This is an important step in the careful consideration of a proposed merger that would have anticompetitive effects on patients, consumers, the market and the entire health care delivery system,” the leaders of the National Association of Chain Drug Stores and National Community Pharmacists Association (NCPA) said in a statement.
The organizations “are concerned that the merger would result in a consolidated pharmacy benefit manager (PBM) with excessive market power, ultimately to the detriment of consumers,” said NACDS president and chief executive officer Steve Anderson and NCPA executive vice president and CEO B. Douglas Hoey.
“As community pharmacies whose primary concern is patient well-being, we are concerned about the threat posed by the planned merger to patient care and pharmacy access,” they said. “We will support the continued and comprehensive investigation of this issue.”
If the merger is approved, the new company would be the nation’s largest PBM, with about a third of Americans relying on it to manage their prescriptions. Atlantic Information Services Inc. identifies Medco as the largest PBM in the country with an 18.2% market share, followed by CVS Caremark Corp. and Express Scripts at 17.8% and 11.8%, respectively.
Among the deal’s opponents is the Independent Specialty Pharmacy Coalition. It says the merger will give Express Scripts 52% of the specialty pharmacy market.