Express Scripts Bid for Medco Needs Hearing, U.S. Lawmaker Says
Express Scripts Inc. (ESRX)’s $29.1 billion bid for Medco Health Solutions Inc. (MHS) may face scrutiny from the U.S. House Judiciary Committee after the panel’s top Democrat questioned whether the deal is anticompetitive.
The panel should evaluate how the deal will affect health insurance and drug costs, Representative John Conyers of Michigan said in a letter yesterday to Committee Chairman Lamar Smith, a Texas Republican.
Express Scripts’s plan to form the biggest U.S. pharmacy benefits manager requires approval by U.S. antitrust regulators. The customer base of the St. Louis-based company would rise 50 percent to 135 million if the purchase is cleared, according to Arthur Henderson, an analyst at Jefferies & Co. in Nashville, Tennessee. The biggest rival, CVS Caremark Corp. (CVS), based in Woonsocket, Rhode Island, serves 85 million people.
A congressional hearing allows lawmakers to “examine how the merger would affect competition, American employers, consumers, patients and pharmacists,” Conyers said in the letter. Kim Smith, a spokeswoman for committee Republicans, didn’t respond yesterday to an e-mail seeking comment on the lawmaker’s request.
Pharmacy benefits managers act as middlemen among drugmakers, pharmacies and health-plan sponsors to negotiate prices and manage the use of drugs by patients.
Express Scripts will tell regulators the combined company would “drive costs out of the system,” in part by extracting lower prices from drugmakers and tracking whether patients take their medicines, Chief Executive Officer George Paz said July 21 on an analyst call.
Trade groups representing drugstore chains and independent pharmacists are urging regulators to reject the deal, saying it would squelch competition and undermine patient care.
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