The proposed merger between Express Scripts and Medco Health Solutions, Inc. has led to concerns that the deal will cause an increase in drug prices and decrease competition.
Express Scripts and Medco are two of the nation’s largest pharmacy benefits managers (PBMs). As PBMs, the companies broker prescription drug contracts for employers, unions and health plans.
Last July, Missouri-based Express Scripts announced that it would purchase Medco for $29 billion. If the merger is approved, the combined company would administer 1.14 billion prescriptions annually and handle 40 percent of all drugs administered by PBMs. The merged company would control the majority of the market place in several key areas, including mail order and specialty pharmacy drugs.
“We will lower drug costs that are far too high and improve health outcomes for consumers. As the big drug companies merge, as large chain drug stores buy up their competition and demand higher prices, we must become more effective representing the interests of plan sponsors and consumers. Patients — not profits — must come first,” said George Paz, chairman, president and CEO, Express Scripts.
While Express Scripts and Medco say the combined company’s scale would give it substantial buying power to drive down drug prices and lead to lower costs for consumers, some consumer advocates are questioning whether the projected savings will be passed on to consumers.
The merger is being reviewed by the Federal Trade Commission, which will determine whether it will approve the deal.
Various politicians, supermarket associations, consumer groups, chain drug stores and community pharmacists have lobbied against the merger.
“I’m opposed to this merger for these reasons — it would increase costs. It would reduce access to quality health care and it would impact independent pharmacists and community pharmacists by reducing their business opportunities and their employment,” said Eva Clayton, a former member of Congress and chair of the Preserve Community Pharmacy Access Now, a national coalition of consumers, businesses and community-based pharmacists who oppose the merger.
Clayton noted that the proposed deal could cause increased costs for community pharmacies which would adversely impact minorities and poor people in urban areas who rely on them for access to medications, health screenings and prescription counseling.
“Access to that health care is threatened if these community pharmacists aren’t able to make enough profit to stay in business,” Clayton said during a Tribune editorial board meeting.
FTC Spokesperson Mark Block would not comment about when the commission is expected to vote on the deal.
In an opinion column opposing the merger, Harry Alford, president and CEO of the National Black Chamber of Commerce, said the stakes are higher for African Americans than the average American consumer.
“If prices go up, as expected under this merger, and community pharmacies are no longer able to compete in the hostile climate created by the PBMs, African Americans throughout the country will lose access to needed medications and other pharmacy services,” Alford wrote.
“This is disturbing in light of existing health disparities. African Americans are more likely to be afflicted with life-threatening diseases like heart disease, diabetes and cancer than whites. Infant mortality is higher. We are less likely to be immunized against common, easily-preventable illnesses. So the convenient, localized services provided by community pharmacies in our neighborhoods are especially important.”
Express Scripts and Medco have delayed closing the merger, which gives the FTC more time to finish assessing the deal. In previous statements, Express Scripts said it expected the merger to close by the end of the first half of the year. Express Scripts provided the new timeframe in a regulatory filing last week with the Securities and Exchange Commission.
“Medco and Express Scripts continue to work with the FTC and expect that the mergers will be completed by the earlier part of the second quarter of 2012,” said the Express Scripts filing.