Debate Heats Up on Proposed Medco-Express Scripts Merger
Three Republican senators have joined in support of critics who are opposed to the mega-merger of Express Scripts Inc. and Medco Health Solutions Inc. with concerns that the merger may reduce competition.
In a letter to Federal Trade Commission (FTC), Republican senators Saxby Chambliss, Johnny Isakson and Jerry Moran urged a "thorough and complete investigation" of the proposed union of two of the three largest pharmacy benefit managers (PBMs). They urge the FTC to “take into account what impact this proposed merger could have on consumers and patients, on taxpayers, on the government, and on pharmacies," and all those who will be at jeopardy if Express Scripts and Medco Health Solutions come to dominate and control the specialty and mail order pharmacy markets.
Express Scripts also released a study showing that the merger will enable tens of billions of dollars in annual drug cost savings.
Two of the nation’s biggest pharmacy benefit managers funded the study that found that their cooperation will save employers, the government, labor unions and consumers between $51 billion and $87 billion every year on the cost of prescription medications, according to the study by Compass Lexicon.
“This study shows the economic benefits created by PBMs today, the role that PBMs should play in constraining rising health-care costs in the future and the role the merger of Express Scripts and Medco can play in accelerating those savings,” Jonathan Orszag, the study’s lead author, said in a statement that accompanied the report. Orszag, senior managing director at Washington-based Compass, served as an economic policy adviser to former president Bill Clinton.
"We appreciate these Senators and all members of Congress who have taken a stand for patients by voicing their doubts about this merger," said NCPA CEO B. Douglas Hoey, in a statement. "This merger would reduce patient choice and access to pharmacy services and ultimately result in higher prescription drug costs. While these companies may talk a good game to regulators and in Congressional testimony, their actions suggest they are more concerned with rewarding Wall Street investors and lavish executive compensation than improving patient care or reducing costs. The latest example of this being the reported $83 million 'golden parachute' for five Medco executives, should the merger go through."
With the Senators' letter, now 27 members of Congress have voiced concerns about the merger. Their unrest is shared by a wide range of other public and private sector stakeholders. Recently, the American Antitrust Institute (AAI), the Small Business Majority and the Pennsylvania Pharmacy Council came out against the merger.
The report sponsored by Express Scripts and Meco “overlooks the considerations that should be driving the conversation” about the proposed merger, said David Balto, a Washington-based antitrust attorney representing consumer groups, business organizations and specialty pharmacies who oppose the deal, in a statement to Bloomberg.
The comments came ahead of a hearing by the U.S. Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights is entitled "The Express Scripts/Medco Merger: Cost Savings for Consumers or More Profits for the Middlemen?"