Phar­macy deal causes waves

Crit­ics: Ex­press Scripts, Medco plan would up prices

Modern Healthcare - - The Week In Healthcare - Jaimy Lee

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.

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