Senator Kohl Warns FTC About Proposed Express Scripts-Medco Merger

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The proposed combination of Express Scripts and Medco, two of the nation’s largest pharmacy benefits managers (PBMs), “has the potential to have profound effects on the ability of both community and chain drug stores to compete,” according to Senator Herb Kohl (D-Wisconsin).

Kohl, Chairman of the Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy, and Consumer Rights, sent a letter to FTC Chairman Jon Leibowitz on February 2 expressing his concerns. The FTC is currently reviewing the merger.

The letter summarizes findings of a subcommittee investigation that included a December 6, 2011, hearing. Kohl said that the subcommittee received extensive testimony from both independently owned community pharmacies and chain drug stores regarding what they believe to be the dangers to competition from the merger.

Community pharmacies asserted that their ability to stay in business was seriously threatened by the danger of the combined Express Scripts/Medco reducing reimbursement rates. PBMs set the reimbursement rates that pharmacies receive when they dispense drugs to patients covered by health plans administered by those PBMs.

Kohl urged the FTC to carefully evaluate whether it was likely that the combined PBM would pass on to plan sponsors any reduction in reimbursements paid to pharmacies as a result of the deal.

“In brief, without reaching any final judgment as to the legality of this proposed merger under the antitrust laws, I believe this proposed merger presents serious competition concerns which should be examined carefully by the FTC, and that your agency should approve this merger only if you find that it is not likely to substantially harm competition in the markets affected,” Kohl said.