Pharmacy Groups Express Concerns About Health Care Megamergers

February 28, 2020
Christine Blank

Volume 164, Issue 4

In new comments to the US government, several pharmacy groups say that mergers of major companies have had significant anticompetitive effects without improving the cost and quality of health care.

In new comments to the US government, several pharmacy groups say that mergers of major companies, such as CVS Health and Aetna, have had significant anticompetitive effects without improving the cost and quality of health care.

The Alliance for Pharmacy Compounding, American Pharmacists Association, American Society of Consultant Pharmacists, National Alliance of State Pharmacy Associations, and National Community Pharmacists Association collectively urged for antitrust policy reform in a joint comment to the Federal Trade Commission and the Department of Justice Antitrust Division.

Earlier this year, the agencies proposed new guidelines for determining how to evaluate and whether to approve potential mergers seeking to combine companies that don’t compete with one another, but operate in the same supply chain.2

Citing the CVS Health/Aetna and Cigna/Express Scripts mergers as well as the OptumRx affiliation with UnitedHealthcare, the pharmacy groups said that vertical consolidation in the pharmacy sector has yielded significant anticompetitive effects without promised improvements in cost or quality of care.

The agencies should create a regulatory regime that does not allow these transactions to unduly harm health care access, quality, and service, the groups argued.

In the pharmacy sector, the 3 largest pharmacy benefit managers (PBMs) control more than three quarters of all prescriptions filled in America–equaling over 3.3 billion prescriptions, the groups wrote.

“Each of these PBMs has been combined with other, equally powerful companies in the healthcare value chain. This surge in vertical consolidation has essentially created an oligopoly of integrated healthcare companies controlling nearly all aspects of the healthcare and pharmacy supply chain,” the groups wrote.

Despite claims of enhanced efficiencies, the CVS Health/Aetna merger has not produced lower costs for consumers, according to the groups. Consumer Reports found that CVS pharmacies often have the highest retail prices -400% higher than independent pharmacies‘ retail prices for the same prescription drugs, according to the groups. “As patients’ out-of-pocket costs and premiums continue to rise, while quality and service levels decline, the agencies need to be as skeptical of efficiencies claims in vertical transactions as they are in horizontal transactions.”

A growing body of research evidence, including from current and former agency officials, shows that vertical consolidation in health care has led to increased prices without offsetting improvements in quality, they wrote. “Given the evidence of anticompetitive harm from vertical consolidation, we ask the federal antitrust enforcement agencies to consider renewed approaches to tackling concentration in the health care sector.” the cost and quality of health care.1

References:

1. Alliance for Pharmacy Compounding, American Pharmacists Association, American Society of Consultant Pharmacists, National Alliance of State Pharmacy Associations, National Community Pharmacists Association. Re: Federal Trade Commission and Department of Justice’s Draft Vertical Merger Guidelines. February 26, 2020. http://www.ncpa.co/pdf/joint-pharmacy-stakeholder-comments-ftc-doj-vertical-merger-guidelines.pdf.

2. FTC and DOJ Announces Vertical Merger Guidelines for Public Comment [news release]. FTC’s website. https://www.ftc.gov/news-events/press-releases/2020/01/ftc-doj-announce-draft-vertical-merger-guidelines-public-comment

 

 

 

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