More Than 50 Employers From Across the Nation Tell FTC Mega-PBM Merger Could Increase Costs, Hurt Community Pharmacies

WASHINGTON, Feb. 13, 2012 /PRNewswire/ -- More than 50 employers from across the country today sent a letter to the Federal Trade Commission (FTC) expressing concern about the proposed merger between pharmacy benefit managers (PBMs) Express Scripts, Inc. (ESI) and Medco Health Solutions.  The group said that approving the $29 billion deal could make pharmacy plans more expensive for employers and hurt businesses and employers throughout their communities.

In the letter, the group urged the FTC to consider the downstream ramifications that this merger will have on health care consumers, employers seeking health care plans and the business environment in general.

"If the merger is approved, the company that emerges will manage the prescription plans for roughly 135 million Americans," the letter states.  "PBMs are already a highly-concentrated industry, and this merger will only magnify that problem.  Because of this concentration, the merger will result in even fewer choices in an already limited market for employers who are seeking cost savings in their various health plans." 

The PBMs' application is currently being reviewed by the FTC and a decision is expected soon on whether or not the deal will move forward.  If approved, the merger could take effect as soon as early this year.

The text of the letter is included below:

Dear Chairman Liebowitz:

As the owners of businesses, we are writing to share some concerns we have about a proposed merger between two of the largest pharmacy benefit managers (PBM) in the country that is currently under your consideration. 

We are concerned that the merger between Express Scripts and Medco could create a company that has overwhelming market share, making pharmacy plans more expensive for employers, like us, and hurting small businesses in the community, such as neighborhood pharmacies.

If the merger is approved, the company that emerges will manage the prescription plans for roughly 135 million Americans.  PBMs are already a highly concentrated industry, and this merger will only magnify that problem.  Because of this concentration, the merger will result in even fewer choices in an already limited market for employers who are seeking cost savings in their various health plans. 

It could be argued that Medco and Express Scripts already enjoy an incredible amount of market concentration, which can be measured by profitability.  Data on both of these firms show that their pre-tax profits far exceed their competitors - retail pharmacies - as well as other health care industry organizations, such as pharmaceutical and medical device companies, and managed care organizations. 

This merger will also harm many small businesses, such as the neighborhood pharmacy.  Express Scripts and Medco are the third and first largest PBMs in the country.  This merger would eliminate a major competitor from an already concentrated market and will allow this company to force neighborhood, and even some chain pharmacies, to concede additional discounts for the prescriptions they fill.   

Failure to acquiesce to the prices named by the PBMs will result in pharmacies being black listed and driven out of business.  The former customers of these pharmacies will be pushed into mail-order pharmacy plans, which are operated by the PBMs. 

We respect the role of competition in our free enterprise system and we are alarmed by how competition will be stymied if this merger is approved.  The Federal Trade Commission is charged with ensuring that no company – except a public utility – is permitted to corner the market.   But consumers are protected from price gouging from public utilities. 

This merger might not result in a monopoly by definition, but it will certainly be a near-monopoly in practice.  We urge you to consider the points that we mentioned in this letter, and consider the downstream ramifications that this merger will have on health care consumers, businesses seeking health care plans, and the business environment in general.

Preserve Community Pharmacy Access NOW! is a coalition of consumers, businesses and community-based pharmacists from across the country that have come together for the purpose of opposing the planned merger between Express Scripts Inc. and Medco Health Solutions Inc.  PCPAN is a project of Pharmacy Choice and Access Now.

SOURCE Preserve Community Pharmacy Access NOW!