Tuesday, May 01, 2012

Pharmacies Denied Temporary Relief Blocking Integration of Express Scripts, Medco

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

In a suit to block the combination of two pharmaceutical benefit management (PBM) companies—Express Scripts, Inc. and Medco Health Solutions, Inc., retail pharmacies and pharmacy trade associations were not entitled to a preliminary injunction holding separate the PBMs, the federal district court in Pittsburgh has decided.

The plaintiffs failed to establish the likelihood of immediate, irreparable harm that could be alleviated by the issuance of the preliminary injunction order holding separate Medco from Express Scripts.

Shortly after the complaint was filed on March 29, 2012, by the National Association of Chain Drug Stores, the National Community Pharmacists Association, and nine retail pharmacy companies, the PBMs consummated their merger in light of FTC approval of the transaction.

The plaintiffs alleged that the merger “would create an immediate and irreversible harm to competition by destroying two significant competitors in the relevant markets.” They argued that, unless a preliminary injunction holding the PBMs separate were issued, Express Scripts would displace Medco’s management and operations personnel, assume Medco’s administrative functions, and learn Medco’s confidential and trade secret information. However, all of the plaintiffs’ fears already had been realized, according to the court.

At the time that the merger was closed, Express Scripts terminated virtually all of Medco’s senior management, as well as its sales leadership and senior supply chain management team. Medco’s confidential and trade secret information already had been provided to Express Scripts. Thus, any hold-separate order would have been ineffective as a means to protect the plaintiffs from the asserted harm.

Furthermore, the plaintiffs did not demonstrate how, if they ultimately were successful in their cause of action, a brief delay in the divestiture of Medco would cause them any additional immediate and irreparable harm.

The April 25, 2012, decision in National Assn. of Chain Drug Stores v. Express Scripts, Inc., Civil Action No. 12-395, appears at 2012-1 Trade Cases ¶ 77,864.

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