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Express Scripts buys Medco for $29 billion


By Jaimy Lee
Posted: April 2, 2012 - 8:30 am ET
Tags:

Express Scripts completed its $29 billion acquisition of Medco Health Solutions, creating the largest pharmacy benefits manager in the U.S. despite an aggressive advocacy campaign to fight the deal.

The Federal Trade Commission voted 3-1 to approve the deal between St. Louis-based Express Scripts and Medco, which is based in Franklin Lakes, N.J. The FTC announced that it had closed its investigation today.

“Our merger is exactly what the country needs now,” Express Scripts CEO and Chairman George Paz said in a news release. “It represents the next chapter of our mission to lower costs, drive out waste in healthcare and improve patient health.”

The companies, along with CVS Caremark's PBM, were the three largest pharmacy benefit managers. The combined company, which will be called Express Scripts Holding Co., has 45% market share, according to FTC Commissioner Julie Brill's dissenting statement.

Brill argued that the “game-changer” of a merger is a “duopoly with few efficiencies in a market with high-entry barriers—something no court has ever approved.”

However, the commission's statement said that deal is not anticompetitive.

“While this transaction appears to result in a significant increase in industry concentration, nearly every other consideration weighs against an enforcement action to block the transaction,” the FTC said . “Our investigation revealed a competitive market for PBM services characterized by numerous, vigorous competitors who are expanding and winning business from traditional market leaders.”

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Groups representing community pharmacists, retail drugstore chains and small businesses have aggressively opposed the merger since the companies announced plans to merge in July.

Last week, the American Antitrust Institute, the American Consumer Institute and the Preserve Community Pharmacy Access Now coalition held a conference call with reporters in an effort to urge state attorneys general to file suit and block the deal even if the FTC approved it.

The groups said during the call that 77 lawmakers had written letters to the FTC in opposition of the deal.

Also last week, the National Association of Chain Drug Stores, the National Community Pharmacists Association and nine retail pharmacy companies filed a lawsuit in U.S. District Court for the Western District of Pennsylvania against the merger.

The organizations filed a motion for a temporary restraining order today, requesting that Medco's assets and operations remain separate until the lawsuit is reviewed.

“That the agency is allowing the merger to proceed, and without any conditions, leaves patients and pharmacies vulnerable to significant harm from a combined ESI-Medco,” the NACDS and NCPA said in a joint statement. “NACDS and NCPA remain deeply concerned that this merger will reduce competition to unhealthy levels in several prescription drug markets that are already highly concentrated.”

A statement from the National Community Pharmacists Association said: “The NACDS-NCPA lawsuit to block the Express Scripts-Medco merger remains active. NACDS and NCPA are currently reviewing all of our legal options and determining how we will proceed with the litigation.”

A spokesman for Express Scripts said that the lawsuit has no merit. 

The FTC said its investigation included cooperation from 32 state attorneys general. No state attorneys general have filed suit against the merger at this time.

Safety Net Hospitals for Pharmaceutical Access, an association that represents 800 hospitals that qualify for or participate in the 340B program, said earlier this year that it opposed the merger because of concerns about the increased risk of “discriminatory reimbursement of 340B pharmacies.”


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