Inside This Issue - Opinion
A lot is on the line in big PBM merger
October 3rd, 2011
by Jeffrey Woldt
Two competing narratives are being crafted in an effort to influence federal regulators’ thinking about the pending merger between Express Scripts and Medco Health Solutions, two of the nation’s three biggest pharmacy benefits management companies.
Not surprisingly, the National Association of Chain Drug Stores and the National Community Pharmacists Association have taken the lead in opposing a combination that would concentrate unprecedented power in the hands of a single PBM. Dennis Wiesner, senior director of privacy, pharmacy and government affairs for NACDS member H-E-B, summed up the threat in recent testimony before a congressional committee: "If [the merger is] approved, nearly 135 million Americans would rely on this mega-PBM to manage their prescription benefits. It would control over 40% of the national prescription volume, 60% of the mail-order pharmacy market and more than 50% of specialty pharmacy sales."
Pharmacy operators gained important allies last month when five consumer groups sent a letter to Federal Trade Commission chairman Jon Leibowitz. "We believe that competitive markets benefit all consumers by maintaining lower prices, promoting innovation and developing efficiencies. … The proposed merger will significantly reduce competition and, in turn, cause significant harm," wrote the Consumers Union, Consumer Federation of America, U.S. PIRG, National Consumers League and National Legislative Association on Prescription Drug Prices.
Executives at Express Scripts and Medco take the same facts and draw the opposite conclusion. David Snow, chairman and CEO of Medco, says: "As the health care industry necessarily focuses on reducing costs; as the ‘super committee’ [in Congress] seeks to find health care savings without compromising patient care; and as all participants in the system are faced with the prospect of doing more with less, by joining with Express Scripts and combining the complementary expertise of the two companies, we will be able to significantly accelerate efforts to reduce overall costs in the health care system and improve the quality and efficiency of care delivery."
Those statements summarize the arguments that the FTC will have to sort out. Its deliberations are worth watching. The decision promises to have major implications for both pharmacies and the patients they serve.