The National Association of Chain Drug Stores, the National Community Pharmacists Association and nine pharmacy operators have filed a lawsuit against the planned merger of pharmacy benefit managers Express Scripts Inc. and Medco Health Solutions Inc.

National Association of Chain Drug Stores, National Community Pharmacists Association, NACDS, NCPA, Express Scripts, Medco Health Solutions, Express Scripts-Medco merger, pharmacy benefit managers, PBM, lawsuit, injunction, U.S. District Court for the Western District of Pennsylvania, Steve Anderson, B. Douglas Hoey, independent pharmacies, Federal Trade Commission, FTC, community pharmacy, prescription drugs, retail pharmacy, specialty pharmacy, Preserve Community Pharmacy Access NOW, PCPAN, Eva Clayton, David Balto, American Antitrust Institute, American Consumer Institute, Russell Redman

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NACDS, NCPA sue to block PBM merger

March 29th, 2012

ALEXANDRIA, Va. – The National Association of Chain Drug Stores, the National Community Pharmacists Association and nine pharmacy operators have filed a lawsuit against the planned merger of pharmacy benefit managers Express Scripts Inc. and Medco Health Solutions Inc.

NACDS and NCPA said Thursday that the lawsuit was filed in the U.S. District Court for the Western District of Pennsylvania. The pharmacy plaintiffs, which are based in or have a presence in Pennsylvania, are Brighton Pharmacy, Klingensmith Drug Inc., Kopp Drug, Inc., Lech's Pharmacy Group, Means Lauf Super Drug, Hometown Pharmacies, Skippack Pharmacy, Thompson Pharmacy and Value Drug Company/Value Specialty Pharmacy.

The suit calls for an injunction to halt the Express Scripts-Medco merger deal, saying it would violate antitrust law, and seeks relief for the plaintiffs.

Currently, the FTC is reviewing the merger agreement and is expected to come to a decision soon.

Specifically, the suit claims the merger — which would create the nation's largest PBM — would have an anticompetitive effect in the retail pharmacy and specialty pharmacy markets as well as reduce competition for PBM services to employers and health plan sponsors, in turn driving up the cost of prescription drugs.

"A merger of Express Scripts and Medco would have dire consequences for patients and the retail community pharmacies that serve them. We continue to make a strong case to the Federal Trade Commission and state attorneys general about the negative impact this proposed merger will have on patient access to community pharmacy and the healthcare delivery system," NACDS president and chief executive officer Steve Anderson and NCPA CEO B. Douglas Hoey said in a joint statement.

"Community pharmacy believes it's imperative to act now to protect patients. Today's legal filing builds upon the ardent efforts by community pharmacy to prevent the proposed merger through an 'all-levels, all branches of government' strategy to protect patients and community pharmacy," they stated.

The community pharmacies that are plaintiffs in the suit would have more than half of their prescriptions, or a significant portion of them, controlled by Express Scripts-Medco if the merger is approved by the FTC, according to the lawsuit document.

In addition, the suit claims these pharmacies would have little power in negotiating contracts with the combined PBM. As a result, the pharmacy operators might end up being compelled to accept noncompetitive or below-cost rates for drugs that would force them to cut pharmacy hours and services and possibly close stores.

"Community pharmacies have aggressively engaged in opposition to the merger at the executive level through meetings and communications with the FTC and state attorneys general and at the legislative level by testifying before the House and Senate," Anderson and Hoey said in their statement. "Engaging with the courts is another component in that process."

Reiterating their concerns about the merger, NACDS and NCPA explained that Express Script-Medco would reduce patient access to pharmacies and their services; squelch competition for PBM services, namely to large plan sponsors; and reduce competition for specialty pharmacy services and mail-order pharmacy services. They say the combined entity could hike mail order prices and drive business to their own mail-order pharmacies and noted that the merged company would control a large share of the supply line for brand and generic prescription drugs, enabling it to boost prices for plans and patients.

NACDS and NCPA added that 76 members of Congress have written to the FTC to express concerns about the proposed merger, more than 30 state attorneys general are investigating the deal, and leading consumer groups have voiced their concerns about the anti-consumer effects of such a merger.

"We believe that this legal action will put further emphasis where it should be – on patients," Anderson and Hoey stated. "We look forward to continuing to work with the FTC and state attorneys general as they continue their investigations. We believe there is compelling evidence that warrants the FTC and the states attorneys general blocking this merger. We will also continue to engage with the many members of Congress who have expressed concern about the merger as we seek to work with all branches and all levels of government to prevent the grave harm this merger would cause to health plans, pharmacies and patients."

Later Thursday afternoon, Preserve Community Pharmacy Access NOW! (PCPAN) — a coalition of consumers, businesses and community pharmacists formed to oppose the Express Scripts-Medco deal — hailed the lawsuit by NACDS, NCPA and the community pharmacies.

"I applaud NACDS and NCPA for taking steps to protect American patients and consumers from this harmful merger," commented PCPAN chair Eva Clayton, a former member of the House of Representatives (D., N.C.). "A consolidated ESI/Medco would have tremendous power, enabling the mega-PBM to squeeze the health care system for its own profits — at the expense of patient choice, access and service. Approving this merger would be an absolute travesty."

On Wednesday, PCPAN joined with the American Antitrust Institute, American Consumer Institute, and public interest attorney and former FTC policy director David Balto in a media teleconference that called on state attorneys general to block Express Scripts-Medco merger deal.

"Consumers should not sleep well if this merger is not challenged," Balto said in a statement. "The merger will enable Express Scripts to raise prices and prevent consumers from using their community pharmacy. Going to court is the only way to prevent consumers from being coerced by a dominant PBM. That is the message that we are sending to state attorneys general today." 

The groups said published reports have indicated that attorneys general in New York, Pennsylvania, Ohio, Texas and California may file suit to block the merger if it is approved without serious conditions.