Retail News Breaks
NACDS, NCPA protest Express Scripts-Medco merger
August 4th, 2011
ALEXANDRIA, Va. – The National Association of Chain Drug Stores and the National Community Pharmacists Association have made their opposition to the proposed merger of Express Scripts and Medco Health Solutions official.
NACDS and NCPA said Thursday that they have sent their first formal letter to the Federal Trade Commission in shared opposition to the $29.1 billion merger deal, which would create the nation's largest pharmacy benefit management (PBM) provider. Announced two weeks ago, the merger pact is awaiting regulatory and shareholder approvals plus other customary closing conditions.
Noting that they "represent a near totality of the nation's pharmacy community," NACDS and NCPA said the merger deal raises anticompetitive concerns that would impact patients, consumers, the prescription drug market and the health care delivery system overall.
"The National Association of Chain Drug Stores and the National Community Pharmacists Association write to express our opposition to the proposed merger of Express Scripts and Medco. The merger would result in a consolidated pharmacy benefit manager (PBM) with excessive market power that will have anticompetitive effects on patients and the health care delivery system," the retail pharmacy groups wrote in the letter, addressed to addressed to FTC chairman Jonathan Leibowitz. "We respectfully request that the commission carefully examine this proposed merger and hereby offer our assistance to the commissioners and staff."
In particular, NACDS and NCPA said, the planned merger poses a "threat" to patient care and pharmacy access.
"Our 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," the letter stated. "This combination will 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. This will create harm not only to pharmacies, but also to consumers.
"To support our position, we are preparing data that will assist the commission in its assessment of the merger's anticompetitive impact," the groups added.
NACDS and NCPA immediately expressed their opposition to the Express Scripts-Medco deal when it was announced July 21. In a joint statement, the two retail drug store groups said the merger "creates a middle man that is too big to play fair" and called the agreement "a bad deal for America, for health care plans, for pharmacies and, most notably, for patients."
The merger would combine the nation's No. 2 (Express Scripts) and No. 3 (Medco) PBMs, creating a company with around a 30% share of the PBM market in terms of prescription volume, industry analysts estimate. The next largest player would be CVS Caremark Corp., with roughly a 20% share of the PBM market by prescription volume.
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