ST. LOUIS — In one fell swoop, the pharmacy benefits market is changing in a big way.

The $29.1 billion merger between Express Scripts Inc. and Medco Health Solutions Inc., the No. 2 and No. 3 pharmacy benefit managers (PBMs), respectively, would create the nation’s largest PBM, if the transaction clears regulatory hurdles.

The combined company would fulfill 1.6 billion annual prescription claims and serve an estimated 32% of the PBM market. CVS Caremark Corp. would rank second, with about 940 million annual prescription claims and approximately 20% of the market.

The proposed merger is opposed by pharmacy groups, which assert it undermines the status of pharmacists as valued health care resources in their communities. Express Scripts and Medco, though, see the deal as bolstering their ability to lower the cost of prescription drugs for Americans.

“The cost and quality of health care is a great concern to all Americans; this is the right deal at the right time for the right reasons,” said Express Scripts chairman and chief executive officer George Paz. “Companies like ours have a responsibility to provide the leadership and resources required to drive out waste in health care and provide the best care in the world. The merger with Medco will accelerate our efforts to create greater efficiencies in the health care system and better protect American families from the rising costs of prescription medicine while improving health outcomes.”

David Snow, chairman and CEO of Medco, commented: “We have each been successful in creating shareholder value because we are both passionate about driving value to our customers through service, innovation, and a focus on cost and quality. We have a shared desire to improve the way health care is delivered in this country, and I believe this creates a strong, best-of-breed foundation, culturally, for a very successful merger.”

Under the agreement Express Scripts will pay Medco shareholders $71.36 per share, or a total of $29.1 billion. Medco shareholders will receive $28.80 in cash and 0.81 shares of stock in the combined company for each Medco share they own.

The headquarters of the combined company will be in St. Louis, and Paz will serve as its chairman and CEO. The board of directors will be expanded to include two current independent Medco board members.

The deal has been unanimously approved by both companies’ boards of directors.

For Walgreen Co., the PBM merger would likely complicate its ongoing contract dispute with Express Scripts, according to analyst Mark Miller of William Blair & Co.

“As a larger collective bargaining agent, it is logical to think Express Scripts would have the ability to increase its demands when negotiating with pharmacy retail providers,” he wrote in a research report on the deal.

Miller went on to suggest that CVS Caremark may be in a position to benefit from the merger of its PBM rivals.

“Greater concentration of PBM industry share should enhance industry discipline and pricing, and the company could be a beneficiary among payers that are concerned about merger integration risk,” Miller wrote. “Also, CVS drug stores should be in an enhanced bargaining position with Express Scripts for reimbursement — at least until the Walgreens dispute is settled. If Walgreens remained out of Express Scripts’ network, CVS Caremark could have enormous leverage over its PBM competitor, since it would be almost inconceivable that Express Scripts could successfully compete without both Walgreens and CVS stores in a network (representing close to 40% share).”