An alliance of drugstores and community pharmacists has filed a federal lawsuit to stop Express Scripts Inc.'s $29.1 billion takeover of Medco Health Solutions Inc., a deal they fear would create a giant pharmacy benefits manager with too much leverage and market share.
The National Association of Chain Drug Stores and the National Community Pharmacists Association say a combination of two of the biggest U.S. pharmacy benefits managers would have dire consequences for patients and retail community pharmacists. They warn that the deal could reduce competition and service for patients and raise mail-order drug prices, among other consequences.
"This merger would create a huge new middleman that stands between patients and their pharmacies, between patients and the medications they need," said Don Bell, a senior vice president for the chain drugstores association.
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Express Scripts spokesman Brian Henry declined to comment on the lawsuit.
The complaint, filed Thursday, comes a day after Express Scripts and Medco said their deal could close as soon as next week. Shareholders from both companies have approved it, but Federal Trade Commission is still reviewing it.
PBMs run prescription drug plans for employers, government agencies and other clients. They use large purchasing power to negotiate lower drug prices and make money by reducing costs for health plan sponsors and members.
They also hold down costs by extracting discounts and rebates from drugmakers, using tiered copayments that nudge patients to buy generics or the lowest-cost brand names, and reminding patients to take medicines as scheduled to limit costly complications.
If St. Louis-based Express Scripts and Franklin Lakes, N.J.,-based Medco close their deal, they would create the largest U.S. PBM, by far, and they have touted the savings and efficiency their combination would create.
But the deal also has stirred some concern about competition in Congress. Sen. Herb Kohl, D-Wis., said in a letter sent last month to the FTC that given the "massive buying power" the two companies already have, it seems unlikely the deal will lead to a big increase in buying power to attain cost savings.
The acquisition drew opposition from independent pharmacists immediately after it was announced last July.
The lawsuit was filed in the U.S. District Court for the Western District of Pennsylvania.
Shares of Express Scripts fell 30 cents to $53.59 in afternoon trading, and Medco's stock was down 73 cents to $70.47. Meanwhile, the Standard & Poor's 500 index also was down slightly.
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