NCPA’s comments warn of impact of vertical mergers on independents

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NCPA’s comments warn of impact of vertical mergers on independents

By Sandra Levy - 02/19/2020

The National Community Pharmacists Association is warning officials about the impact it says vertical integration is having on the healthcare space. The organization shared comments with the Federal Trade Commission and the Department of Justice's Antitrust Division, which issued draft guidelines on vertical mergers in the healthcare industry earlier this year. 

In his comments, NCPA CEO Doug Hoey called the rise of vertical integration in health care “an oligopoly of integrated healthcare companies controlling nearly all aspects of the healthcare and pharmacy supply chain." Hoey also said, "These vertical mergers have allowed a handful of massive companies to exercise enormous power over patients and the marketplace. In many cases, we believe they are creating for themselves unfair advantages that are driving up patient costs and killing local businesses."

The NCPA also pointed out that the three largest pharmacy benefit managers now control more than three-quarters of all prescriptions filled in America — totaling more than 3.3 billion prescriptions. Drug prices haven’t gone down for patients, however, and in many cases the mergers have left many local communities without a pharmacy, NCPA said.

“A health insurer or PBM that merges with a large retail pharmacy chain may have the incentive to exclude competing pharmacies from preferred networks or to provide financial incentives to utilize the acquired pharmacies over the patients’ pharmacy of choice,” NCPA said. “This risk is particularly acute for pharmacies and other healthcare providers that care for underserved patient populations.”

NCPA said that it’s also tempting for such big players to charge smaller competitors “untenable reimbursement fees” as a way to squeeze them out of the market. “Independent pharmacies have very little negotiating power when contracting with PBMs ... and routinely must agree to take-it-or-leave-it contracts to be part of a PBM’s pharmacy network,” said the group.

Hoey added that independent pharmacies are not afraid of competition, but for their sake and for their patients, the competition must be fair.

Finally, Hoey said, “There are 21,000 independent pharmacies in the country. That’s larger than any one chain. And they are integral to the national healthcare system. In fact, in many cases, they are the only healthcare providers in their communities,” said Hoey. “The big players are systematically trying to muscle them out of business. Stopping that sort of thing is exactly why antitrust protections exist, and we want the FTC and the Department of Justice to be more vigilant, more active, and more aggressive at enforcing them.”

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