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American Consumer Institute Warns FTC: ESI/Medco Deal Poses Significant Anticompetitive Risks
Date:1/11/2012

WASHINGTON, Jan. 11, 2012 /PRNewswire-USNewswire/ -- The American Consumer Institute Center for Citizen Research (ACI) today released a letter sent to the Federal Trade Commission (FTC) expressing concerns about the proposed merger between Express Scripts, Inc. (ESI) and Medco Health Solutions, two pharmacy benefit management (PBM) companies.  The two PBMs announced a $29 billion merger deal last year that could take effect as soon as early 2012.

"Approving this mega-PBM merger would only exacerbate the conflicts of interest and concentration of market power that already exist in the PBM industry, and would in no way benefit consumers," said Steve Pociask, president of ACI.  "For these reasons, the Institute is strongly opposed to the Express Scripts-Medco merger, and we urge the commission to dedicate adequate resources to thoroughly review the merger."  

In a letter to the FTC, the organization expressed concerns that the PBM industry is already poses anticompetitive risks for consumers.  According to ACI, an approved merger will only exacerbate the problems that already exist.

"PBMs broker agreements on multiple sides - and profit from each," the letter states.  "Because they always have better and more complete information on costs and prices than other involved parties, PBMs have a lop-sided advantage in dealings with the other parties which enables them to profit from managing the health plans sponsored by corporations, governments and unions as well as by funneling sales to preferred drug manufacturers in return for kickbacks."  

ESI and Medco are two of the nation's three largest PBMs, and last year announced plans to merge.  The deal is currently under review by the FTC and Congress.  If the merger is approved, it is clear what would result: some number of pharmacies would be driven out of the market altogether.  That would further encourage PBMs to engage in self-dealing, favoring their own mail-order services over competitive pharmacies.  Thus, consumer choice and access to pharmacies would be diminished. 

"Today, Express Scripts and Medco are the third and first largest PBMs in the market.  A merger between the two would eliminate a large competitor from an already-concentrated market.  The combined company would be able to leverage its size to further squeeze pharmacies and drug manufacturers," Pociask continued.  "There are no obvious benefits to consumers from this merger, but there are clear risks and likely damages."

ACI is a nonprofit (501c3) educational and research institute.  For more information, visit www.theamericanconsumer.org


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SOURCE American Consumer Institute Center for Citizen Research (ACI)
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