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As a cutting-edge health benefits expert, PENSA always makes sure to be on the up-and-up with all the latest and most pertinent health care industry news. In such an active, ever-changing industry, this kind of news is helpful for us to ensure we’re providing the most informed services possible. And of course, we want to keep our clients current as well. Check back often for the latest healthcare industry news.
Skepticism grows around Medco/Express Scripts Deal
WASHINGTON, Feb 6 (Reuters) - Objections to Express Scripts’ $29 billion plan to buy rival pharmacy benefits manager Medco Health Solutions are accumulating as U.S. antitrust regulators weigh whether they have enough evidence to stop the mega merger. The Food Marketing Institute, which represents the biggest grocery chains, sent a letter to the Federal Trade Commission on Feb. 2 saying the merged company would be able to cut payments to supermarket pharmacies that already operate at very tight margins.”(We) ask the commission to bring an enforcement action to enjoin the merger,” the association said in its letter to FTC Chairman Jon Leibowitz, which was seen by Reuters on Monday.
A source closely watching the deal said that key people at the FTC believe it should be stopped but want to ensure they have adequate evidence to win a court fight to stop it. A decision on whether or not to sue is expected by the end of February or early in March, the source said. The FTC said it does not comment on pending investigations.
Pharmacy benefits managers (PBMs) like Medco and Express Scripts are hired by insurance companies to handle prescription drug plans. They sometimes provide drugs by mail order, through their own pharmacies and by contracting with chains and independent pharmacies. The deal, announced in July, would combine two of the three largest PBMs that are big enough to manage prescription drug benefits for large, nationwide companies. The third is CVS Caremark.
A Medco-Express Scripts merger would create an industry leader with nearly one-third of the market. The letter from the Food Marketing Institute, which counts Safeway, Giant, Wal-Mart and Supervalu among its membership, adds another opposition voice.
In early January, a coalition of consumer groups, including U.S. PIRG and the Consumer Federation of America, also urged antitrust regulators to stop the deal. Further, a group of about two dozen state attorneys general are looking at the merger, and could challenge it on their own.
The FTC has been working actively to prevent increases in health care costs. The FTC in late January sued to block Omnicare’s $441 million bid to buy rival PharMerica Corp. Omnicare and PharMerica are the top two companies in the long-term pharmacy services sector, and the FTC said the combination would harm competition and allow Omnicare to raise the price of drugs for the frailest of the elderly.Express Scripts is remaining optimistic about its own prospects.Express Scripts has said that the deal is good for the American consumer, and expects it will close in the first half of 2012.
In a show of confidence that the deal will go through, Express Scripts announced on Monday that it was offering a second round of notes aimed at financing the $29 billion transaction. Medco shares, however, have consistently traded at a discount to Express Scripts’ $71.36 per share offer, reflecting investor caution over regulatory approval of the deal. In early afternoon trading on Monday, Medco stock was up 12 cents at $63.73.