Ex­press Scripts deal draws fire

Only one other large com­peti­tor would re­main

Modern Healthcare - - The Week in Healthcare - Jaimy Lee

Ex­press Scripts’ pro­posed $29.1 bil­lion ac­qui­si­tion of ri­val phar­macy ben­e­fits man­age­ment com­pany Medco Health So­lu­tions would cre­ate by far the big­gest player in the busi­ness. That prospect may force smaller PBMs out of the mar­ket and quickly drew sharp crit­i­cism from re­tail phar­ma­cies.

The planned deal, ex­pected to close in the first half of 2012 and an­nounced July 21, would leave CVS Care­mark as the lone other large com­peti­tor, with the com­bined Ex­press Scripts and Medco con­trol­ling nearly a quar­ter of the mar­ket by mem­ber­ship and nearly a third by pre­scrip­tion vol­ume, ac­cord­ing to 2010 fig­ures col­lected by the Phar­macy Ben­e­fit Man­age­ment In­sti­tute, a trade group.

Dr. Brenda Motheral, ex­ec­u­tive di­rec­tor of the Phar­macy Ben­e­fit Man­age­ment In­sti­tute, said the ac­qui­si­tion could lead to other merg­ers and ac­qui­si­tions within the PBM mar­ket. “With­out other deals, it will force some PBMs out of the mar­ket,” she said.

Ex­press Scripts and Medco ex­ec­u­tives said they ex­pect the PBM mar­ket to re­main com­pet­i­tive. “Mas­sive changes are on the hori­zon for our in­dus­try in­clud­ing health­care re­form and the up­com­ing wave of brand­wave drugs los­ing patent pro­tec­tion,” Ex­press Scripts Chair­man and CEO Ge­orge Paz said dur­ing a con­fer­ence call with in­vestors. “In this en­vi­ron­ment, we have to be nim­ble and we have to be smart enough to in­flu­ence events and for­ward-think­ing enough to in­ter­pret events be­fore they oc­cur.”

David Balto, an an­titrust lawyer and se­nior fel­low with the lib­eral Cen­ter for Amer­i­can Progress, has es­ti­mated the con­cen­tra­tion in the busi­ness to be much higher than the in­dus­try group’s fig­ures sug­gest, putting the com­bined mar­ket-share of the big three at 80% in a white pa­per crit­i­cal of Ex­press Scripts’ 2009 ac­qui­si­tion of Wel­lPoint’s PBM divi­sion.

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