Meet­ing re­sis­tance

Ex­press Scripts-medco deal called anti-com­pet­i­tive

Modern Healthcare - - The Week In Healthcare - Jaimy Lee

Ex­press Scripts’ pro­posed ac­qui­si­tion of Medco Health So­lu­tions came un­der in­creas­ing crit­i­cism last week over the im­pact the megadeal could have on competition in the phar­macy ben­e­fit man­age­ment mar­ket.

In a letter last week to Fed­eral Trade Com­mis­sion Chair­man Jon Lei­bowitz, the Na­tional As­so­ci­a­tion of Chain Drug Stores and Na­tional Com­mu­nity Phar­ma­cists As­so­ci­a­tion said the com­bined com­pa­nies would have the clout to raise prices on plans and with pa­tients, and could limit pa­tient ac­cess to phar­macy care.

“The merger would re­sult in a con­sol­i­dated phar­macy ben­e­fit man­ager with ex­ces­sive mar­ket power that will have anti-com­pet­i­tive ef­fects on pa­tients and the health­care de­liv­ery sys­tem,” the trade groups con­tend.

The planned $29.1 bil­lion deal would com­bine mar­ket-leader Ex­press Scripts with Medco, the third-largest PBM com­pany, based on mem­ber­ship, ac­cord­ing to sta­tis­tics pub­lished by the Phar­macy Ben­e­fit Man­age­ment In­sti­tute, the in­dus­try’s trade group. Medco is the largest com­pany based on pre­scrip­tion vol­ume, fol­lowed by CVS Care­mark Corp. and then Ar­gus Health Sys­tems, ac­cord­ing to the PBMI.

“Hav­ing a sin­gle firm with this kind of mar­ket share is re­ally go­ing to force plans to pay more for PBM ser­vices,” said David Balto, an an­titrust lawyer and se­nior fel­low with the lib­eral Cen­ter for Amer­i­can Progress.

PMBI data for pre­scrip­tion vol­ume shows that Medco, CVS Care­mark, Ar­gus and Ex­press Scripts con­trol roughly 60% of the mar­ket. While the top 25 PBM com­pa­nies make up nearly 100% of the mar­ket in terms of pre­scrip­tion vol­ume, 11 of those com­pa­nies each han­dle less than 1% of the mar­ket.

Five of those com­pa­nies, in­clud­ing Ex­press Scripts and Medco, have been in­volved in deals in re­cent months.

PBM deal ac­tiv­ity con­tin­ued apace last week. SXC Health So­lu­tions Corp. said it plans to ac­quire PTRx, a phar­macy ben­e­fit man­ager, and SaveDirec­tRx, a mail-or­der phar­macy provider, for $77 mil­lion in cash and an ad­di­tional $4.5 mil­lion in pay­ments tied to per­for­mance. Cat­a­lyst Health So­lu­tions said in June that it had com­pleted its ac­qui­si­tion of Wal­greens Health Ini­tia­tives, the PBM sub­sidiary of Wal­green Co.

The 2010 data from the PBMI shows that Lisle, Ill.-based SXC Health So­lu­tions had 0.6% of the PBM mar­ket, while Cat­a­lyst and Wal­greens Health Ini­tia­tives con­trol a com­bined 3.9% of the PBM mar­ket.

Brenda Motheral, ex­ec­u­tive di­rec­tor of the PBMI, said changes stem­ming from the health­care re­form law—in­clud­ing the pos­si­bil­ity that em­ploy­ers may re­duce cov­er­age, which would cre­ate a smaller mar­ket for PBMs, and con­tin­ued pres­sure on generic drug mar­gins—are cause for concern.

Yet she noted that the in­dus­try’s busi­ness in spe­cialty drugs, which are used to treat com­plex dis­eases or con­di­tions such as mul­ti­ple sclero­sis

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