Pharmacists: Proposed Express Scripts-Medco Merger Would Reduce Competition and Raise Health Care Costs


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NCPA Urges Federal Trade Commission, Congress to Block Merger

Alexandria, Va. - July 21, 2011

The National Community Pharmacists Association (NCPA) Executive Vice President and CEO B. Douglas Hoey, RPh, MBA issued the following statement today regarding the proposed merger of pharmacy benefit manager (PBM) giants Express Scripts, Inc. and Medco Health Solutions, Inc.:

"The proposed merger of Express Scripts and Medco would quite simply make a bad situation much worse for American employers, government agencies, consumers and pharmacists. The major PBMs already wield an unchecked, one-sided advantage in setting contract and reimbursement terms for community pharmacists, undermining their viability to continue serving patients. Approval of this merger would further distort this marketplace, to the detriment of patients, true competition and lower prices.

"In recent years, the major PBMs like Express Scripts and Medco have paid out $370 million to settle claims of fraud and deceptive practices. That 'rap sheet' is likely to only grow longer if this merger is approved and competition is further reduced due to the combination of these two corporate behemoths. At the same time, the profits of the major PBMs have skyrocketed by 400 percent. That level of profitability for what are essentially middlemen is astounding.

"Congress and the Federal Trade Commission should reject this proposed merger. Indeed, the last pharmacy merger of this scope, involving retail chain CVS and PBM Caremark is already the subject of an intensive FTC investigation over anticompetitive, anti-consumer concerns. In seeking FTC approval of that pact, CVS Caremark officials pledged to be 'agnostic' as to where the patient fills their prescriptions. That promise has rung hollow as the combined company strong-arms the competition and forces patients to CVS Caremark pharmacies, where many report paying higher prices.

"As Congress and federal regulators review this proposal, they should not overlook the near-monopoly it would establish in certain regions of the country and in the national mail order market—both for traditional and specialty drugs. A combination of two of the top three PBMs is troubling enough. An Express Scripts-Medco company would dominate the market in certain parts of the country and effectively eliminate competition. Further, while NCPA believes that the choice between a community pharmacy and mail order should reside with the patient, those who opt for mail order deserve choice and competition, too. Combining their mail order facilities would concentrate 59 percent of the mail order market in one company, according to 2011 Atlantic Information Systems data. In 2009, the combined specialty drug market share for ESI and Medco stood at 52 percent. It is vital to patient care and cost containment that there be real competition in the burgeoning specialty drug market where patients are faced with serious life-threatening diseases and pay an average of $1,900 for a prescription.

"Federal and state government agencies, in particular, should be troubled by this merger. For example, the Medicare Part D drug benefit is built on competition and approving this deal would undermine that foundation. At the state level, increasing this market concentration could increase the cost of state employee and other health plans.

"Undoubtedly, this announcement makes a stronger case for two legislative solutions that NCPA has endorsed. The Pharmacy Competition and Consumer Choice Act (H.R.1971/S.1058) would help protect the ability of patients to go to the pharmacist of their choice and level the pharmacy playing field. In addition, the Preserving Our Hometown Independent Pharmacies Act (H.R.1946) would grant community pharmacies the same negotiating leverage as large chains to secure contracts that put patients first. These bills are opposed by the major PBMs due to their potential to affect their windfall profits and their executives' Wall Street-inspired compensation packages."

The National Community Pharmacists Association (NCPA®) represents the interests of America's community pharmacists, including the owners of more than 23,000 independent community pharmacies, pharmacy franchises, and chains. Together they represent a $93 billion health-care marketplace, have more than 315,000 employees including 62,400 pharmacists, and dispense over 41% of all retail prescriptions. To learn more go to www.ncpanet.org or read NCPA's blog, The Dose, at http://ncpanet.wordpress.com.

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