NACDS Applauds Sen. Kohl's Letter to FTC on Proposed Express Scripts and Medco Merger

Published Online: Friday, February 3, 2012
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The National Association of Chain Drug Stores (NACDS) applauded concerns raised by U.S. Senator Herb Kohl (D-WI) about the proposed Express Scripts and Medco merger in a letter to the Federal Trade Commission (FTC) Chairman Jon Leibowitz. Kohl issued the letter to the FTC as a follow-up to a subcommittee hearing he chaired last December about the proposed merger.

In the letter, Kohl outlined his concerns about the impact that this market-dominant company would have on reducing competition in the marketplace, and its potential effects on patient care, health plans, employers, and community pharmacy.

“Express Scripts’s proposed merger with Medco will unquestionably create a giant PBM that is substantially larger than any competitor, and will result in the combined entity having a dominant market share in mail order and specialty pharmacies. It will reduce choices for PBM services to health plan sponsors, especially large employers. And it has the potential to have profound effects on the ability of both community and chain drug stores to compete,” Kohl wrote in the letter to FTC.

Kohl also described skepticism that the proposed Express Scripts and Medco merger would result in cost-savings for patients, employers and health plans.

“There is considerable doubt that PBM mergers in the past have resulted in any savings being passed on to plan sponsors,” Kohl said. “While the promise that reduced reimbursement payments will in fact be passed on to plan sponsors is very speculative, the evidence we received at our hearing is that the threat to pharmacies is very real.”

“Senator Kohl outlined well-documented and serious concerns about this proposed mega-merger, many of which have been echoed by consumer groups, anti-trust watchdogs and others,” said NACDS President and CEO Steven C. Anderson, IOM, CAE. “NACDS appreciates the serious approach that Senator Kohl has brought to Congressional examination of this proposed merger, which NACDS has said from the outset would create a mega-PBM that is too big to play fair.”

Mike Bettiga, chief operating officer of NACDS-member Shopko Stores Operating Company, LLC, testified before Sen. Kohl and the U.S. Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights on the proposed mega-merger in December. He stressed that the proposed merger would negatively impact patients by limiting or completely removing choice in how they receive their pharmacy services, as well as restrict patient access to services offered by highly-trained community pharmacists who provide education on medications and recommend lower-cost alternatives.

During that same hearing, Kohl made a highly significant point during his statement which brought to light substantial concerns about the proposed merger. At the hearing, Kohl said, "It is notable that no large employer who privately expressed concerns to us wished to testify at today's hearing, often telling us that they feared retaliation from the large PBMs with whom they must do business."
 
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