The National Community Pharmacists Association is calling on federal regulators to block UnitedHealth Group's $13 billion deal to buy Change Healthcare, saying independent pharmacies already struggle to compete against the two companies and that a merger would create an anticompetitive corporate behemoth.
UnitedHealth Group announced in January that its fastest-growing subsidiary, Optum, would pay approximately $8 billion to acquire revenue cycle management and data analytics company Change Healthcare. Optum also plans to pay off $5 billion in debt Change Healthcare owes. At the time, analysts predicted the acquisition would allow Optum to expand its OptumInsight provider business, inform its value-based care initiatives and increase patient engagement.
The proposed deal already attracted federal scrutiny and opposition from hospitals. Now, independent drugstores are weighing in and urging regulators to halt the transaction.
The National Community Pharmacists Association is asking the Justice Department to axe the merger over concerns that Optum's pharmacy benefit manager could use information from Change Healthcare's independent pharmacy customers to undercut them on price and grab even more market share. OptumRx, one of the largest PBMs in the industry, recently announced that it's open for business to those without health insurance.
In late June, UnitedHealth Group launched the Optum Store, an online pharmacy that offers more than 800 generic drugs at reduced prices for those paying with cash. The website also offers telehealth services that connect patients to clinicians who can write prescriptions for antidepressants, birth control, erectile dysfunction drugs and other common medications.
"This deal would give [UnitedHealth Group] a trove of intelligence on its smaller competitors, including thousands of independent pharmacies and their patients," NCPA CEO Douglas Hoey said in a news release. "We believe it would use that intelligence to steer patients away from local pharmacies and send them to their own mail-order business."
Change Healthcare is responsible for routing pharmacies insurance claims to payers and PBMs that decide what pharmacies a patient can use and how much drugstores and pharmacists get reimbursed. The company has access to independent pharmacies dispensing fees, product cost fees, patient data, PBM operations and plan design. In many instances, independent pharmacists do not have the option to switch vendors because the decision depends on their pharmacy management system vendor, according to the independent drugstores group.
"That data will be used to undercut reimbursements and raise fees on independent pharmacies," Hoey said. "It will be used to steer patients to [UnitedHealth Group's] health plan and Optum's mail-order pharmacy. This merger is a threat to fair competition, independent pharmacies and patient choice."
The acquisition previously caught the eye of federal regulators. The Justice Department requested additional information from the companies and extended the amount of time officials have to review the proposed buyout. Both companies agreed not to complete the merger until at least 120 days after providing the necessary information. UnitedHealth Group and Change Healthcare were set to complete the request sometime after Sept. 15. Change Healthcare also notified the Securities and Exchange Commission that both companies would agree to sell some assets if required for antitrust approval.
These offers still left regulators considering a lawsuit to block the merger, according to the the Information, a business news publication.
The American Hospital Association warned the Justice Department that the deal would reduce competition in health IT services for providers. In addition to housing the nation's largest insurer, UnitedHealth Group is one of the largest employers of physicians in the U.S., employing or contracting with more than 50,000 doctors. The American Antitrust Institute has also asked the Justice Department to apply "careful scrutiny" to the proposed acquisition, saying the deal could increase prices for digital health services, offer insurer UnitedHealthcare an unfair advantage and use Change Healthcare's data to more aggressively deny patient claims.
The UnitedHealth-Change Healthcare deal aims to offer patients a better healthcare experience at a lower cost, an Optum spokesperson wrote in an email.
"With distinct and complementary capabilities, this combination will help healthcare providers and payers better serve patients by more effectively connecting and simplifying key clinical, administrative and payment processes to the benefit of the health system and the people we serve," the spokesperson wrote.