Specialty pharmacies urge FTC to block Express Scripts/Medco merger

August 1, 2011

The Independent Specialty Pharmacy Coalition, a group of community-based specialty pharmacies, called on the Federal Trade Commission to block Express Scripts? proposed acquisition of Medco.

The Independent Specialty Pharmacy Coalition (ISPC), a group of community-based specialty pharmacies, called on the Federal Trade Commission (FTC) to block Express Scripts’ proposed acquisition of Medco.

Express Scripts and Medco announced July 21 that they have entered into a definitive merger agreement for $29.1 billion in cash and stock. [See related story, “Healthcare groups warn against Express Scripts/Medco merger”]. On July 22, Drug Topics reported that the merger has industry experts mulling over what will become of Express Scripts' and Medco's respective specialty pharmacy businesses. CuraScript is a wholly owned subsidiary of Express Scripts and Accredo Health Group is a wholly owned subsidiary of Medco.

“The potential combination of Express Scripts and Medco means that CuraScript and Accredo, the nation’s largest specialty pharmacy providers, will hold half of the specialty pharmacy market, which would significantly decrease competition and leverage 1 conglomerate pharmacy against the specialized community pharmacies and thousands of vulnerable patients who will face poorer service from mandantory mail-order, potentially greater hospitalization, and higher medical costs,” ISPC Executive Director Russell Gay told Drug Topics.

“We have seen in the past that where there is no competition in specialty pharmacy, exclusive drugs spiral in cost. With the leverage this acquisition will have, new drugs in the pipeline will increase in cost and create a financial burden to employers, Medicaid/Medicare, patients and health plans alike,” Gay continued.

“We implement narrower networks only at the request of our clients,” said Express Scripts spokesman Brian Henry. “When a client asks to implement a narrower network of pharmacies, we evaluate all available pharmacies to see which deliver the required levels of quality and access at the lowest cost to our clients and the patients they represent. Since PBMs possess a deeper understanding of pharmacy pricing trends than most individual patients do, we help patients choose the most effective and most cost-efficient specialty pharmacies. In doing so, we are promoting competition and driving down overall healthcare costs.”

Specialty drugs for patients with hepatitis C, multiple sclerosis, cancer, and other difficult-to-manage disorders require expertise and have the best outcomes when the pharmacist works closely with the patient, Gay said.

“Patients who work closely with their pharmacist are more likely to take these medications correctly, which helps them avoid transplants and in some cases cures them,” he said. “Companies with enormous rolls of patients cannot have such close touch with patients and people do fall between the cracks - and with these terrible disorders, that can mean unnecessary hospitalization, failed therapies, even death.”

From the perspective of overall patient care, PBM specialty pharmacies have better success with helping patients stay compliant with their doctors' medication because of the specialized nurses and pharmacists that specialty patients have access to, a service that community pharmacies typically cannot provide, according to Henry. “Through our ‘high-touch’ care model, we provide ongoing clinical support, education based on specialized knowledge, and a commitment to achieving true quality of care,” Henry told Drug Topics. “This is especially important in promoting therapy adherence.”

ISPC’s concern is the leverage that a single dominant entity will have on drug manufacturers, forcing manufacturers and health plans to select the dominant entity’s platform as an exclusive distributor. “This proposed merger of PBMs and their specialty pharmacy operations is likely to lead to decreased patient choice and higher costs for health plans and specialty drugs in the specialty area,” Gay said.

An ISPC press release cited an Express Scripts 2010 Drug Trend Report, which showed, for example, that compared to 1.4% for typical pharmaceuticals, the specialty trend for that year came in at 19.6%. Moreover, this trend is expected only to increase in the future. By 2013, the report estimates the specialty trend will reach 27.5%, owing to factors such as increased use and new products entering the market.

The rising trend numbers for specialty medications make the case for the management tools provided by PBMs, according to Henry. “Express Scripts helps to manage costs not only in the pharmacy benefit but also in the medical benefit, where most specialty drug claims still arise. The natural role of PBMs is to promote more competition throughout the pharmaceutical supply chain, including specialty pharmacies.”

"If this merger occurs, pharmacies could see a further reduction inoperating margin as the new entity compares and consolidates their pharmacy contracts to the best rate," Robert T. Taketomo, PharmD, MBA, told Drug Topics. Takemoto is president/CEO and chairman of the board, Ventegra, LLC, a Glendale, Calif.-based managed care contracting services organization that represents payers, providers, PBMs, and government programs.

“This merger would create an entity that approaches, if not exceeds, more than 50% market power in certain regions,” Taketomo said. “It will be interesting to see the FTC position on this merger. This may also reflect a projection by Medco that it will lose the UnitedHealth business (about 25% of current Medco volume), which could help address any FTC issue."

Medco said that UnitedHealth Group Inc. will not renew a pharmacy benefit services contract between the companies. That contract expires Dec. 31, 2012.