Express Scripts-Medco Merger Raises Debate

Eight months and $29.1 billion later, Medco Health Solutions has been acquired by Express Scripts Inc. The merger, approved on Monday, April 2 by the Federal Trade Commission, combines the first and third largest pharmacy benefit manager companies and will result in the new company, Express Scripts Holding Co., providing prescription drug benefit services to approximately 135 million people — or more than one out of every three Americans.

Not everyone is happy, though.

Attorneys for the National Association of Chain Drug Stores (NACDS), the National Community Pharmacists Association (NCPA), and several other retail pharmacy companies filed a law suit last week in federal district court in an attempt to stop the proposed merger. So, while the FTC doesn’t seem to think that this union “threatens the market for how prescription drugs are distributed to patients, owners of brick-and-mortar drugstores certainly do.”

“This merger would create a huge new middle man that stands between patients and their pharmacies, between patients and the medications they need,” said Don Bell, National Association of Chain Drug Stores senior vice president and general counsel, in a conference call with reporters announcing the lawsuit last week.

But in the end, the FTC voted 3 to 1 to end its investigation of the merger, arguing that the existence of 10 other significant competitors in the market would prevent a potential duopoly. The majority also concluded that there was “little likelihood that the merged company would attain monopoly power in negotiating dispensing fees with retail pharmacies,” and that the newly formed company “would control 29% of retail pharmacy prescription sales, below the threshold considered necessary for the exercise of monopoly power.”

What are your thoughts on the Medco/Express Scripts merger? Is it pro-consumer? Anti-retailer? Possibly both? Let us know what you think.

To read more about the merger and what lies ahead, please see below for additional resources.

FTC Approves Express Scripts-Medco Merger [Pharmacy Times]

As Health Care Giants Merge, Pharmacies Aren't Happy [NPR]

Antitrust Enlightenment: A market victory as the FTC approves a drug benefit merger [WSJ]

Express Scripts Judge Sets Hearing on Injunction Request [Bloomberg]