Health Law Blog

Like many independent pharmacy operators, you have probably been following the news of the proposed $29.1 billion merger between Medco and Express Scripts.  It is now official: FTC has granted its approval of the deal.  The merger creates the largest PBM in the nation with the combined market share of 32%.  This is what it means for your store:

1.  Possibly lower reimbursement ratesOne of the purposes of the merger is to lower costs by forcing even lower reimbursements upon pharmacies.  Clearly, no independent pharmacy can afford to lose access to a PBM of this importance.  The combined PBM will be practically immune from competition and will be able to not only lower reimbursement rates, but to set trends for other PBMs to follow.  Although reimbursement rates may not fall immediately due to multi-year contracts, they will probably trend downward in the years to come. 

2.  More mail-order, less patient choiceThe merger creates the third-largest pharmacy operator in the nation, just behind CVS-Caremark and Walgreens--and all of its business is mail-order!  By combining its dominant position in the PBM market with the desire to strengthen its mail-order business, it is expected that Medco-Express Scripts will require more patients to use their mail-order services.  This will undoubtedly take away even more business from independents.

3.  Walgreens will again accept Express Scripts
Many independents benefited from Walgreens' decision not to accept Express Scripts.  This is, however, likely to change.  Walgreens will probably not want to jeopardise its relationships with Medc,o and is expected to begin accepting Express Scripts, which will be part of the newly-merged PBM.

4.  The new PBM's domination in the specialty drugs market
The newly-merged PBM will have a particularly strong position in the high-priced specialty drugs market.  This is where the push to use Medco-Express Scripts mail-order might be felt the hardest.  Reimbursements for these scripts are also likely to trend lower.  

5.  Future mergers likelyWith this merger successfully approved by the FTC, similar deals are expected in the future, leading up to further consolidation and less competition in the PBM market.

What can you do?Many pharmacy organizations and politicians have expressed their concerns about this merger.  You can visit http://www.toobigtoplayfair.com/ and http://preservingcommunitypharmacy.com/ to add your voice to those who rightly fear that the merger will stiffen competition, hurt independent pharmacies and patients.  Lawsuits are being filed across the nation to attempt to undo this merger. 

Share this and forward it to your friends in the industry.  It is not too late to act.