Express Scripts, Medco Face Added Scrutiny on Acquisition
A second congressional committee is planning to examine antitrust concerns raised by Express Scripts Inc. (ESRX)’s proposed purchase of competitor Medco Health Solutions Inc. (MHS), congressional aides said.
The combined company would be the largest U.S. manager of pharmacy benefits for employers, insurers and union health plans. Senator Herb Kohl, a Wisconsin Democrat who leads the Judiciary subcommittee on Antitrust, Competition Policy and Consumer Rights, plans a hearing on the acquisition in November, his spokeswoman, Lynn Becker, said in an e-mail.
Express Scripts’ $29.1 billion purchase is already under review by the Federal Trade Commission, and states have opened inquiries into the sale out of concern that the combined company will command too much market power, St. Louis-based Express Scripts has said. A House subcommittee on competitive issues held a hearing on the sale in September.
Kohl’s hearing “is fully warranted and would help shine a light on a number of costly middlemen practices that needlessly drive up prescription drug costs and would only grow worse should this merger be approved,” said B. Douglas Hoey, chief executive officer of the National Community Pharmacists Association, in an e-mail.
Express Scripts fell 2 cents to $40.06 at 1:26 p.m., after a peak of $40.46. Medco slid 21 cents to $48.51 at 1:28 p.m., off its intraday high of $48.98.
Lobbying Push
Hoey’s group and the National Association of Chain Drug Stores, an organization representing companies including Walgreen Co. (WAG), are lobbying the FTC and Congress against the combination of Express Scripts and Franklin Lakes, New Jersey- based Medco.
Express Scripts CEO George Paz told members of the House subcommittee that the acquisition would result in “safer and more affordable” drugs. A spokesman for Express Scripts, Brian Henry, declined to comment on Kohl’s plans for a hearing.
Kohl comes into the hearing with an open mind on the tie- up, Senate aides said in a telephone interview, and plans to question the companies about whether their merger will reduce costs for drugs and how it would affect pharmacies.
He also wants to know whether insurers and employer health plans could choose from an adequate number of pharmacy benefit managers should Medco disappear, said the aides, who couldn’t be identified because the hearing hasn’t been announced.
The combined company would act as an intermediary in about a third of all U.S. prescription drug sales and would control about 60 percent of the mail-order pharmacy market, according to the House Judiciary subcommittee on Intellectual Property, Competition and the Internet.
To contact the reporter on this story: Alex Wayne in Washington at awayne3@bloomberg.net
To contact the editor responsible for this story: Adriel Bettelheim at abettelheim@bloomberg.net
Rate this Page