NACDS, NCPA, nine retail pharmacy companies sue to block ESI-Medco merger

ALEXANDRIA, Va. — With as much as two-thirds of retail pharmacy operators' business tied up in the potential Express Scripts-Medco merger, the National Association of Chain Drug Stores, the National Community Pharmacists Association and nine retail pharmacy companies on Thursday filed a lawsuit challenging the merger.

"This proposed merger of Express Scripts and Medco will have dire consequences for retail community pharmacies and their patients," NACDS president and CEO Steve Anderson shared during a press conference held Thursday at noon. "The PBM companies talk about savings that would result from this proposed merger, but there is no evidence that the merged company would pass any alleged savings on to consumers and employers."

"Community pharmacists are already over a barrel in [negotiating] with PBMs," NCPA CEO Douglas Hoey added. "This merger would send that proverbial barrel straight over the cliff."

According to the suit, a merged Express Scripts-Medco 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.

The three largest PBMs manage the lives of more than 90% of the employees working for national employers, noted Don Bell, NACDS SVP and general counsel. "The result will be more power for the PBMs to force patients and plans to use PBM-owned mail-order and [PBM-owned] specialty pharmacies and more power to raise drug costs by forcing patients to use more-expensive brand-name drugs that the manufacturers pay the PBMs to promote."

With regard to specialty drugs, PBMs already help define what is and is not considered a specialty drug, added Jennifer Mallon, NCPA general counsel, a factor that could pull prescriptions that would otherwise be filled in a traditional pharmacy out of that marketplace. Mallon distinguished the two drug groups as "designated specialty drugs" for those medicines defined as specialty drugs by PBMs versus "clinical specialty drugs" identified by a clinical need for special storage, control, security handling or patient monitoring to ensure successful clinical outcomes. "PBMs would be able to leverage their number of controlled lives to … force them into their own proprietary mail/specialty dispensing facilities for drugs that typically retail pharmacies have been able to provide."

This combination will control a large share of the supply line for branded and generic prescription drugs, and thereby will have the ability to raise prices for plans and patients, and limit access to pharmacy patient care. The ESI-Medco combination would cover more than 155 million Americans, or more than half of the U.S. population.

The lawsuit was filed in the U.S. District Court for the Western District of Pennsylvania.

The nine community pharmacies, representing both chains and independents and all with a presence in Pennsylvania, include Brighton Pharmacy, Hometown Pharmacies, Klingensmith Drug, Kopp Drug, Lech's Pharmacy Group, Means Lauf Super Drug, Skippack Pharmacy, Thompson Pharmacy and Value Drug Co. Several of the individual pharmacies joining the suit noted that an ESI-Medco merger would comprise as much as 60% of their prescription files today.

According to the group, as many as 76 Congress leaders already have communicated their concerns directly to the FTC and more than 30 state attorneys general actively are investigating the competitive impact of the merger.

Criticism of the merger has come to the forefront in the past week as the FTC nears a decision. Speculation that the merger would receive a favorable decision from the Federal Trade Commission as soon as next week increased following Express Scripts' Form 8-K filing to the Securities and Exchange Commission on Wednesday that the pharmacy benefit manger expected to close the deal.

The Preserve Community Pharmacy Access NOW! coalition Wednesday afternoon held a press conference making a direct appeal to attorneys general to block the ESI-Medco merger in the courts should the Federal Trade Commission approve the merger.