Four more members of Congress – the entire delegation from South Dakota, both Republicans and Democrats – have added their voices to the $21 billion proposed Express Scripts/Medco Health Solutions merger bringing the total number of congressmen and women who have objections to 33, but it looks like the merger may still go through. Shareholders from both companies have approved the deal.
Strident opponents of the proposed merger include the National Association of Chain Drug Stores and the National Community Pharmacists Association, two organizations that represent nearly every traditional pharmacy retail operation in the nation, from tiny independents to massive chains. The basis of their opposition to the merger is that the resulting merger would severely limit market competition, of allowing a single company almost exclusive control of the U.S. supply of brand name and generic drugs. With such unfair leverage, the company would be free to demand increasingly higher prices…in effect, holding both pharmacies and consumers hostage to greed unbalanced by fair competition.
Not that this is a new problem. Walgreens won’t be filling prescriptions for Express Scripts at its 7,700 store locations anymore, since the two companies could not reach a contract agreement. Walgreens blamed Express Scripts for the contract breakdown, saying in a press release that the terms they offered did not make sense for the chain. Express Scripts countered by saying that Walgreens is more than welcome to come back to the fold – but only on their terms.
The pharmacy benefits managers in question, Express Scripts and Medco, deny that monopolistic price gouging will happen, and argue that the merger will result in lower prices through process efficiencies, but unwillingness to deal with one of the largest pharmacies in the nation belay the optimistic reassurances…and does not bode well for the industry, especially the smaller pharmacies with less purchasing power.
The Federal Trade Commission has the final say and is expected to come to a decision during the first half of 2012. In 2006, the FTC rejected a similar merger between Express Scripts and CVS Caremark, citing antitrust concerns. Ironically, the Express Scripts/Medco merger would leave CVS Caremark as the only remaining competition.
What’s your take? Would the merger somehow result in improved health and safety for patients as claimed by the PBMs? Or would prices, already dangerously high, skyrocket even more?