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Consumer groups support lawsuit against PBM merger
April 20th, 2012
PITTSBURGH – Consumer groups have filed a legal brief in support of a lawsuit by retail pharmacy organizations and operators to stop the merger of Express Scripts Inc. and Medco Health Solutions Inc.
The Consumer Federation of America, National Consumers League, National Legislative Association on Prescription Drug Prices and U.S. PIRG on Wednesday submitted an amicus curiae brief in the U.S. District Court for the Western District of Pennsylvania to support a suit filed in March by the National Association of Chain Drug Stores, National Community Pharmacists Association and nine pharmacy operators that calls for an injunction to block the Express Scripts-Medco merger.
Early this month, the Federal Trade Commission approved the merger of the two pharmacy benefit managers. The same day, Express Scripts and Medco announced the completion of the deal.
On April 10, U.S. District Judge Cathy Bissoon heard arguments in the suit brought by NACDS, NCPA and the retail pharmacies, but she didn't issue a ruling on the case.
In their brief, the consumer groups reiterated the arguments of the lawsuit. The suit claims that the combination of the two companies, which creates the nation's largest PBM, violates antitrust law because it will have an anticompetitive effect in the retail pharmacy and specialty pharmacy markets. It also alleges that the merger will reduce competition for PBM services to employers and health plan sponsors, lower the quality of pharmacy patient care and drive up the cost of prescription drugs.
"This transaction raises issues directly relevant to millions of consumers across the nation," the consumer groups' brief stated. "Plaintiffs assert that the merger between Express Scripts and Medco will result in a loss of competition for PBM services, as well as a reduction in competition for the distribution of drugs to consumers. This includes substantial anticompetitive effects in the purchase of retail community pharmacy services and clinical specialty drugs. Plaintiffs allege that the reduction in competition will reduce the quality of prescription drug care provided to tens of millions of patients, force patients into PBM-owned mail-order operations, and increase patients' health care costs by increasing PBM fees and prices for prescription drugs."
The consumer groups noted in the brief that before the FTC's April 2 vote to allow Express Scripts' acquisition of Medco, the PBM market was dominated by just three companies: Express Scripts, Medco and CVS Caremark. But with the approval of the merger, the field has been cut to two dominant players, with Express Scripts representing 45% of the market. The groups also stated in the brief that the merger gives Express Scripts a 31% share of the specialty drugs market.
"Amici submit this brief because such consolidation among health care companies has a substantial likelihood to significantly increase drug costs and decrease consumer access to prescription drugs and accompanying vital pharmacy services," the brief said. "Amici, therefore, respectfully request that the court grant plaintiffs the appropriate relief they are seeking and permanently enjoin the merger."
The pharmacy plaintiffs in the lawsuit, 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.