Express Scripts struck a match to the merger debate after suggesting approval imminent


WHAT IT MEANS AND WHY IT'S IMPORTANT — When Express Scripts filed with the Securities & Exchange Commission that its merger with Medco could close as early as the week of April 2, that seemed to set off a firestorm of activity. Reports were published suggesting the Federal Trade Commission decision was imminent, and what's more that the agency would decide in favor of the merger. Speculative day traders Wednesday morning pushed the opening stock prices across both Express Scripts and Medco higher by 3.9% and 5%, respectively. The anti-merger coalition Preserve Community Pharmacy Access NOW! hosted a press conference asking state attorneys general to do what the FTC might not — block the merger in the courts. And two trade associations representing the entirety of retail pharmacy did exactly that — filed suit in Pittsburgh to block the merger.

(THE NEWS: NACDS, NCPA, nine retail pharmacy companies sue to block ESI-Medco merger. For the full story, click here.)

Still, 40% of DSN online readers don't think the FTC decision will come next week; they think that the FTC decision will extend beyond the 30-day period. (To vote yourself, click here.) Incidentally, share prices across both Express Scripts and Medco also have dropped slightly from their Wednesday open high, but the stocks still were trading at a 1.2% and 1.4% respective premium to Tuesday's close as of Friday afternoon. The 60% remainder of DSN readers who think the FTC decision will come sooner than later are split pretty evenly as to which direction the FTC will decide the week of April 2 — with only a handful more votes on the side of an approved merger.

What was perhaps overlooked in all of this was the fact that the FTC did testify Wednesday morning that there certainly was an anticompetitive element in the relationship between pharmacy benefit managers and independent pharmacy. Before a House committee hearing arguments regarding the Preserving Our Hometown Independent Pharmacies Act of 2011, the FTC testified that waiving antitrust requirements for independents would result in higher drug prices because, get this, the community pharmacies would be better able to negotiate more favorable reimbursement terms. What the FTC did not testify was that in place of that better negotiating position the status quo for those pharmacies is to be force-fed a take-it-or-leave-it proposition on what will amount to — if the merger is approved — almost as much as two-thirds of the independents' prescription business.

Beyond trending stock prices and the line on the will-it/won't-it/when-will-it-happen DSN poll, here are the numbers that should stick with you as this story continues to play out the week of April 2. The Express Scripts-Medco books, combined, represent more than half (as high as 60%) of the prescription business of some of the plaintiffs in the suit filed Thursday. Across the nation both Express Scripts and Medco represent 155 million lives, or 49.5% of every man, woman and child in the United States as of Friday afternoon. As many as 78 Congress leaders have written the FTC to say, "Wow, this really isn't such a good idea, this merger." And as many as 30 state attorneys general are investigating the question, "We hear this is bad, but how bad can it be for my state?"

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