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Most claims dismissed in antitrust suit vs. ESI-Medco
August 28th, 2012
PITTSBURGH – A federal judge has dismissed most of the claims made by the National Association of Chain Drug Stores, the National Community Pharmacists Association and nine independent pharmacies in their antitrust lawsuit against the merger of Express Scripts Inc. and Medco Health Solutions Inc.
In a decision on Monday, Judge Cathy Bissoon of the U.S. District Court for the Western District of Pennsylvania relinquished the plaintiffs' claims that the combination of the two pharmacy benefit managers (PBMs) would have an anticompetitive impact on retail pharmacies in their capacities as purchasers and/or providers of prescription drugs and pharmacy services to consumers and large employers.
However, Bissoon allowed to proceed the retail pharmacy plaintiffs' claim that Express Scripts-Medco would be in a position to use its market power to force specialty drug patients to use the PBM's own mail-order and in-house specialty pharmacies.
"The anticompetitive acts alleged by [retail pharmacy] plaintiffs would include forcing patients to use defendants' [ESI-Medco's] specialty pharmacy — regardless of the patient's wishes — by denying claims for specialty drugs purchased in any other," Bissoon wrote in her 23-page ruling. "As a result, defendants' argument that plaintiffs allege injury with respect to this claim based merely on 'too much competition' is unpersuasive."
On Tuesday, NACDS and NCPA said they are examining the court's ruling.
"NACDS and NCPA appreciate that the judge has maintained several claims in this lawsuit. We are reviewing the decision to determine our next steps with regards to the case," NACDS president and chief executive officer Steve Anderson and NCPA CEO B. Douglas Hoey said in a statement.
Bissoon said in her decision that the retail pharmacy plaintiffs have until Sept. 10 to file an amended complaint for their claims involving the provision of retail community pharmacy services, as competitors for the provision of drugs to the beneficiaries of large employers, and as competitors in the market for the provision of full-service, nationwide PBM services to large private employers.
The judge noted that the plaintiffs "failed to allege a cognizable antitrust injury" regarding their claims that the merged PBM would create an anticompetitive environment in the retail community pharmacy market.
"In the end, plaintiffs appear the base their arguments for antitrust injury in this case on mere depressed reimbursement rates, which ... is insufficient to confer antitrust standing on them with respect to this claim," Bissoon wrote.
She dismissed altogether the plaintiffs' claims made in their capacities as buyers of full-service, nationwide PBM services and as suppliers in the market for the provision of drugs to the beneficiaries of large employers.
NACDS, NCPA and the independent pharmacies filed their suit to block the ESI-Medco merger on March 29. The pharmacies, which are based in or have a presence in Pennsylvania, are Brighton Pharmacy, Klingensmith Drug Inc., Kopp Drug, Inc., Lech's Pharmacy Group, Means Lauf Super Drug, Hometown Pharmacies, Skippack Pharmacy, Thompson Pharmacy and Value Drug Company/Value Specialty Pharmacy.
Just days after the suit was filed, the Federal Trade Commission voted to allow Express Scripts to complete its $29 billion acquisition of Medco, a deal that created the nation's largest PBM, holding about a third of the market for prescription drug benefits.
The FTC let the transaction proceed after an eight-month investigation of whether the merger would squelch competition for PBM services, boost the combined company's bargaining power with pharmacies, and have a negative impact on patients using specialty drugs for rare or chronic conditions. The merger deal was announced in July 2011.