IBJNews

FTC asks critics of Express Scripts-Medco deal for ideas

Back to TopCommentsE-mailPrintBookmark and Share

Two pharmacy groups opposing Express Scripts Inc.’s proposed acquisition of Medco Health Solutions Inc. said they were asked by the U.S. Federal Trade Commission to suggest ways to revise the $29.1 billion deal so it wouldn’t harm competition.

“We have responded to their questions about additional ways to address these concerns,” the National Community Pharmacists Association and the National Association of Chain Drug Stores said in a joint statement.

FTC Chairman Jon Leibowitz has been seeking ways to ensure that the transaction, which would create the largest U.S. manager of pharmacy benefits, wouldn’t drive up prices and reduce pharmacy services, said a person familiar with the review.

The two companies employ more than 800 workers at two central Indiana facilities, but it wasn't immediately clear how the merger would affect local operations.
Express Scripts acquired WellPoint Inc.’s pharmacy benefits subsidiary in 2009.

The FTC’s request to opponents of the Medco-Express Scripts deal may signal the agency is leaning toward approving it with conditions, said Jeffrey Schmidt, former director of the FTC’s Bureau of Competition.

“It doesn’t make any sense asking for remedies unless you thought remedies may be appropriate,” said Schmidt, a New York- based partner at the law firm Linklaters LLP, who isn’t involved in the investigation.

Cecelia Prewett, an FTC spokeswoman, declined to comment.

The FTC plans by the end of this month to complete an antitrust review of the proposed acquisition, said the person, who wasn’t authorized to speak publicly and declined to be identified. Express Scripts agreed in July to buy Medco.

Increased competition from UnitedHealth Group Inc.’s pharmacy benefit manager unit, OptumRx, is making approval of the Express Scripts-Medco deal more likely, the person said.

Agency officials are discussing whether the FTC should require St. Louis-based Express Scripts to sell some of its specialty pharmacies to gain approval of the deal with Franklin Lakes, N.J.-based Medco, the person said.

Specialty pharmacies sell treatments for ailments such as cancer and HIV that often are injected or infused and usually require cooling or other special handling.

About 31 percent of specialty drugs sold in the U.S. in 2010 passed through pharmacies owned by Express Scripts or Medco, according to Adam Fein, founder and president of Pembroke Consulting Inc. in Philadelphia.

Under the merger agreement, Express Scripts and Medco had said they were willing to sell one mail-order pharmacy unit and one specialty pharmacy if needed to win regulatory approval.

Express Scripts isn’t willing to sell its entire specialty business, said spokesman Brian Henry, who declined to comment on potential remedies. Henry said the company expects the merger to be completed in the first half of the year.

Chrissy Kopple, a spokeswoman for the chain-drug store association, and Kevin Schweers, spokesman for the community pharmacists group, declined to provide the organizations’ recommendations.

In their joint statement, the groups, both based in Alexandria, Va., said they would prefer that the FTC challenge the deal in court.

“NACDS and NCPA continue to be steadfastly opposed to the merger,” the groups said in the statement.

Pharmacy-benefits managers like Express Scripts and Medco negotiate prices with drugmakers for health-plan sponsors, manage worker claims and track patients’ use of medicines. Their profits are tied to cutting their clients’ drug costs.

Such companies save health-plan sponsors and consumers as much as $87 billion in annual prescription-drug costs, Compass Lexecon, an economic consulting firm in Washington, said in a December report funded by Express Scripts and Medco.

At a Dec. 6 hearing of the Senate Judiciary antitrust subcommittee, Express Scripts Chief Executive Officer George Paz said the company would use its increased size after the acquisition to bargain for better prices from drugmakers and pharmacies.

A combined Express-Medco would handle 34 percent of prescriptions in the U.S. this year, Pembroke’s Fein said.

That share will shrink to 29 percent next year because UnitedHealth Group of Minnetonka, Minnesota, the biggest U.S. health plan by sales, switched from Medco to its own pharmacy benefits unit, OptumRx, he said.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. I never thought I'd see the day when a Republican Mayor would lead the charge in attempting to raise every tax we have to pay. Now it's income taxes and property taxes that Ballard wants to increase. And to pay for a pre-K program? Many studies have shown that pre-K offer no long-term educational benefits whatsoever. And Ballard is pitching it as a way of fighting crime? Who is he kidding? It's about government provided day care. It's a shame that we elected a Republican who has turned out to be a huge big spending, big taxing, big borrowing liberal Democrat.

  2. Why do we blame the unions? They did not create the 11 different school districts that are the root of the problem.

  3. I was just watching an AOW race from cleveland in 1997...in addition to the 65K for the race, there were more people in boats watching that race from the lake than were IndyCar fans watching the 2014 IndyCar season finale in the Fontana grandstands. Just sayin...That's some resurgence modern IndyCar has going. Almost profitable, nobody in the grandstands and TV ratings dropping 61% at some tracks in the series. Business model..."CRAZY" as said by a NASCAR track general manager. Yup, this thing is purring like a cat! Sponsors...send them your cash, pronto!!! LOL, not a chance.

  4. I'm sure Indiana is paradise for the wealthy and affluent, but what about the rest of us? Over the last 40 years, conservatives and the business elite have run this country (and state)into the ground. The pendulum will swing back as more moderate voters get tired of Reaganomics and regressive social policies. Add to that the wave of minority voters coming up in the next 10 to 15 years and things will get better. unfortunately we have to suffer through 10 more years of gerrymandered districts and dispropionate representation.

  5. Funny thing....rich people telling poor people how bad the other rich people are wanting to cut benefits/school etc and that they should vote for those rich people that just did it. Just saying..............

ADVERTISEMENT