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Pharmacy groups hail senator's letter on PBM merger
February 3rd, 2012
ALEXANDRIA, Va. – The National Association of Chain Drug Stores and the National Community Pharmacists Association commended Sen. Herb Kohl (D., Wis.) for highlighting concerns about the planned merger of pharmacy benefit managers Express Scripts Inc. and Medco Health Solutions Inc.
NACDS and NCPA said Kohl on Thursday sent a letter to Federal Trade Commission Chairman Jon Leibowitz explaining that the blockbuster merger may be anticompetitive and could negatively impact patient care, health plans, employers and community pharmacy, particularly in the areas of pharmacy access and prescription drug costs.
Kohl issued the letter to the FTC as a followup to a subcommittee hearing he chaired last December about the Express Scripts-Medco merger, which was announced this summer. The FTC is currently reviewing the deal, which is opposed by a number of consumer groups and has raised the concern of dozens of congressman and state attorney generals.
"Express Scripts' proposed merger with Medco will unquestionably create a giant PBM that is substantially larger than any competitor, and will result in the combined entity having a dominant market share in mail order and specialty pharmacies. It will reduce choices for PBM services to health plan sponsors, especially large employers. And it has the potential to have profound effects on the ability of both community and chain drug stores to compete," Kohl wrote in his letter to FTC.
Kohl, who is chairman of both the Senate Judiciary subcommittee on antitrust, competition policy and consumer rights, also described skepticism that the PBM merger would result in cost-savings for patients, employers and health plans.
"There is considerable doubt that PBM mergers in the past have resulted in any savings being passed on to plan sponsors," Kohl stated in the letter. "While the promise that reduced reimbursement payments will in fact be passed on to plan sponsors is very speculative, the evidence we received at our hearing is that the threat to pharmacies is very real."
Steve Anderson, president and chief executive officer of NACDS, and B. Douglas Hoey, CEO of NCPA, noted that Kohl underscored key points about the potential impact of the merger.
"Sen. Kohl outlined well-documented and serious concerns about this proposed mega-merger, many of which have been echoed by consumer groups, antitrust watchdogs and others,” Anderson said in a statement. "NACDS appreciates the serious approach that Sen. Kohl has brought to congressional examination of this proposed merger, which NACDS has said from the outset would create a mega-PBM that is too big to play fair."
Since the merger deal was announced, Kohl has demonstrated leadership "in standing up for pharmacy competition and patient access to local pharmacists," according to Hoey.
"On behalf of small business community pharmacists and their patients, NCPA has opposed this merger from day one and will continue to fight against its approval," Hoey stated. "This merger is the wrong prescription for the country because it will reduce patient access to pharmacy services, undermine competition and lead to higher drug costs for patients, the government and employers."
NACDS noted that during the Dec. 6 subcommittee hearing, Kohl made a significant point that brought to light substantial concerns about the proposed merger. He said, "It is notable that no large employer who privately expressed concerns to us wished to testify at today's hearing, often telling us that they feared retaliation from the large PBMs with whom they must do business."
NCPA also spotlighted comments in Kohl's letter to the FTC regarding lower reimbursement rates and the impact on patient access to community pharmacies.
"Substantial doubt exists as to whether any declines in reimbursement rates would in fact be passed on to plan sponsors," Kohl wrote. "First, the decline in competitor PBMs for large plan sponsors discussed above will significantly reduce the competitive pressure on the combined Express Scripts/Medco PBM to pass on such savings. Second, there is considerable doubt that PBM mergers in the past have resulted in any savings being passed on to plan sponsors. While the promise that reduced reimbursement payments will in fact be passed on to plan sponsors is very speculative, the evidence we received at our hearing is that the threat to pharmacies is very real. I urge the FTC to carefully evaluate whether it is likely that the combined PBM will pass on to plan sponsors any reduction in reimbursements paid to pharmacies as a result of this deal."