Rx Groups Ask FTC to Block Express Scripts, Medco Merger; Rep. Conyers Seeks Hearings

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Two groups representing pharmacies urged the Federal Trade Commission to oppose a merger of pharmacy benefit managers Express Scripts Inc. and Medco Health Solutions Inc.

The Aug. 3 letter from the National Association of Chain Drug Stores (NACDS) and the National Community Pharmacists Association (NCPA) said the PBMs' merger would result in a consolidated company with “excessive market power that will have anticompetitive effects on patients and the healthcare delivery system.”

Meanwhile, the top Democrat on the House Judiciary Committee Aug. 5 called for a hearing on the proposed merger.

Rep. John Conyers Jr. (D-Mich.) said in a letter to Judiciary Chairman Lamar Smith (R-Texas) that the committee should examine how the merger would affect competition in the prescription drug benefit and pharmacy market.

The pharmacy groups told FTC that their opposition “stems from the fact that the merger would result in a substantial reduction of competition in already highly-concentrated markets, including those involving PBM services, as well as mail order distribution services and specialty pharmaceutical services.” Such a merger would control a “large share of the supply line for brand and generic prescription drugs, and thereby will have the ability to raise prices to plans and patients, and limit access to pharmacy patient care.”

Medco and Express Scripts announced the merger in late July, at which time NACDS and NCPA announced their opposition (see previous article). Under the merger agreement, Express Scripts would buy Medco for $29.1 billion. The companies said they expect the transaction to close in the first half of 2012.

NACDS and NCPA offered to assist FTC in its assessment, examination, and investigation into the merger's anti-competitive nature and its consequences on patient access and consumer care.

Express Scripts said Aug. 4 in a statement that it is “proud of the relationships it has built over the past 25 years with pharmacies of every type.”

“We work closely with retail pharmacies of every size to negotiate contracts that are beneficial to all parties,” Express Scripts said. “We will continue to support the growth and expansion of independent pharmacies in our networks. Our goal is to make sure patients have access to the medications they need at the best possible price in all settings.”

In July, George Paz, chairman and CEO of Express Scripts, said “the merger with Medco will accelerate our efforts to create greater efficiencies in the healthcare system and better protect American families from the rising costs of prescription medicine while improving health outcomes.”

The pharmacy groups' letter is available at http://www.nacds.org/user-assets/pdfs/2011/newsrelease/8_3_FTC.pdf . Conyers' letter is at http://op.bna.com/hl.nsf/r?Open=sbar-8kjskq .