Express Scripts Inc. on Monday created the nation's largest pharmacy benefits manager by completing its $29.1 billion acquisition of Medco Health Solutions Inc., while an alliance of drugstores and community pharmacists vowed to keep fighting the deal in federal court in Pittsburgh.
The Federal Trade Commission approved the acquisition in a 3-1 vote, clearing the last hurdle. St. Louis-based Express Scripts then completed its purchase of Franklin Lakes, N.J.-based Medco, saying the combined company will drive down health care costs.
The FTC said its eight-month antitrust review found "a competitive market for pharmacy benefit management services."
But the National Association of Chain Drug Stores and National Community Pharmacists Association disagreed. The two Alexandria, Va.-based groups said they've "aggressively fought this merger from day one because of its potential harm to patients and to competition."
The associations and 16 pharmacy owners and other businesses said in a lawsuit filed last week that they fear that a giant pharmacy benefits manager with too much leverage and market share will slash local pharmacists' reimbursements for filling prescriptions.
Pharmacy benefits managers run prescription drug plans for employers, government agencies and other clients, using their large purchasing power to negotiate lower prices. They make money by reducing costs for health plan sponsors and members.
In a joint statement, CEOs Steven C. Anderson of the drug store association and Douglas Hoey of the pharmacists' group said they will push for an expedited court review of their case and ask the judge to direct Express Scripts and Medco to keep their assets separate for now.
Judge Cathy Bissoon scheduled a telephone status conference for this morning, according to court records.
Express Scripts spokesman Brian Henry said the company "believes the allegations contained in this complaint are without merit and intends to vigorously contest these matters."
Anderson and Hoey are urging state attorneys general to try to block the deal and noted that more than 30 have been "scrutinizing" it. Nils Frederiksen, spokesman for Pennsylvania Attorney General Linda Kelly, said the office won't confirm or deny investigations.
With the acquisition complete, "We don't know where, when or what's going to happen," Harry Davis, owner of Brighton Pharmacy in New Brighton, said yesterday. His business is taking part in the lawsuit.
"All we can do is sit back and wait, and deal with it as it comes," Davis said. Others involved in filing the lawsuit include Klingensmith Drug. Inc. of Ford City, which runs eight pharmacies in Armstrong, Clarion and Indiana counties; Specialized Pharmacies LLC, which has five Hometown Pharmacies in Western Pennsylvania; and two Altoona-based chains.
The Express Scripts and Medco deal creates a pharmacy benefits manager so large that it will handle the prescriptions of about 135 million people, or more than one in three Americans.
Express Scripts said the acquisition should result in cost savings of $1 billion once the companies are fully integrated. Both companies become subsidiaries of Express Scripts Holding Co., which will trade on the Nasdaq stock exchange under the symbol "ESRX."
Express Scripts has made news with its public split with Walgreen Co., the nation's largest drugstore chain. After a contract expired, Walgreen stopped filling prescriptions for Express Scripts, saying it would rather give up the revenue than continue filling unprofitable prescriptions.
Additional Information:Pharmacists rally in Harrisburg
About 200 pharmacists and technicians from across the state will be in Harrisburg today, urging House and Senate members to pass bills designed to help community drugstores better compete with mail-order pharmacies.
The legislation would prohibit insurers, pharmacy benefit managers and government programs from requiring that patients fill prescriptions by mail, or from imposing higher co-payments on drugstore-filled prescriptions than on mail orders.
The Pennsylvania Pharmacists Association is pushing the change, saying it will level the playing field for drugstores that agree to take part in provider networks. The state budget office, in a report this month, said the legislation could push health care payers to limit coverage on drugs or raise premiums.
David J. Cippel, president of Klingensmith Drug Inc. of Ford City, said sales have dropped as certain networks prevented the eight-store chain from offering better terms. Currently, patients have an $18 co-pay for a 30-day supply of a branded drug, while a mail order co-pay might be $9, he said. Also, 'We can't fill 90-day supplies' in many cases due to restrictions, he said.
