Express Scripts deal draws fire
Only one other large competitor would remain
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.