Pharmacy deal causes waves
Critics: Express Scripts, Medco plan would up prices
Specialty pharmacy, one of the fastestgrowing segments in the pharmacy benefit management sector, is becoming a focal point for critics of the proposed merger between Express Scripts and Medco Health Solutions.
The $29.1 billion deal, which would merge two of the largest three PBMs in the share of Express Scripts and Medco would have the ability to influence more manufacturers into exclusive agreements, a move that could lessen competition among PBMs in addition to reducing access and raising prices for patients.
Prime Therapeutics President and CEO Eric Elliott said the Eagan, Minn.-based PBM neither opposes nor supports the deal, but is concerned about the merger’s impact on exclusive deals. “The concern here is that it could be a more widespread pattern,” Elliott said.
Rather than have the Federal Trade Commission force divestitures of the companies’ specialty pharmacy facilities or businesses, Elliott said Prime Therapeutics would prefer the FTC address limits on exclusive deals.
Express Scripts and Medco are willing to make some divestitures or dispositions, but the scale of the divestitures that the companies are willing to make is limited. The merger agreement states that the combined company will make, if necessary, a divestiture or disposition of property, plant or equipment of either company’s specialty pharmacy dispensing or infusion facilities but excluding those that exceed $30 million in net value as well as an Express Scripts specialty pharmacy in Indianapolis.
During a hearing last week about the merger before the House Judiciary Committee’s Subcommittee on Intellectual Property, Competition and the Internet, Rep. Mel Watt (DN.C.) asked Express Scripts Chairman and CEO George Paz if the deal would still be desirable if the FTC required the divestiture of the company’s specialty pharmacy business. “It would not,” Paz responded.
The merger would provide Express Scripts and Medco with enough influence to grow the specialty pharmacy business, in addition to the companies’ mail-order businesses, well past the current market estimates, said Jennifer Mallon, general counsel for the National Community Pharmacists Association. “With so much clout, (the company) would grow dramatically post-merger,” Mallon said.