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Express Scripts, Medco sued over merger

Trade groups say the union is a threat to local pharmacies

A handful of trade groups are angered over the prospect of Express Scripts Inc. and Medco Health Solutions Inc. uniting. The National Association of Chain Drug Stores (NACDS), the National Community Pharmacists Association (NCPA) and nine independent pharmacies filed a lawsuit on March 29 in the U.S. District Court for the Western District of Pennsylvania, alleging the merger is a threat to the viability of local pharmacies.

St. Louis-based Express Scripts entered a deal to purchased Medco in July 2011 for $29.1 billion, which would create what was billed as the nation’s leading health care services company. That deal was made official today. Combined, the companies say the merger allows them the ability to lower health care costs, create better models of care and improve patients' adherence to prescribed treatment regimens.

"Our merger is exactly what the country needs now," George Paz, Express Scripts chairman and CEO, said in a statement. "It represents the next chapter of our mission to lower costs, drive out waste in healthcare and improve patient health. We remain focused on formulary management, channel management and closing gaps in care, which will allow us to further improve the health of people with chronic and complex medical conditions.”

The trade groups and pharmacies all allege the merger violates antitrust laws, as the combined entity will reduce competition and raise consumer prices. Additionally, more than 80 members of Congress have spoken out to the Federal Trade Commission against the merger, and 30 states attorneys are investigating its competitive impact.

“A merger of Express Scripts and Medco would have dire consequences for patients and the retail community pharmacies that serve them,” said NACDS President and CEO Steven Anderson and NCPA CEO B. Douglas Hoey in a statement. “We continue to make a strong case to the Federal Trade Commission and state attorneys general about the negative impact this proposed merger will have on patient access to community pharmacy and the healthcare delivery system.”

The NACDS posted in a blog that the merged company would “reduce access and service to patients; reduce competition for PBM services, particularly to large plan sponsors; reduce competition for specialty pharmaceutical services; and reduce competition in mail order services, allowing the combined entity to raise mail order prices and drive business to their own mail order pharmacies regardless of patient preference. This combination will control a large share of the supply line for brand and generic prescription drugs, and thereby will have the ability to raise prices for plans and patients, and limit access to pharmacy patient care.”

Both Express Scripts and Medco are now wholly owned subsidiaries of Express Scripts Holding Co.

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