Scrutiny rises on Express Scripts-Medco deal

MARLEY SEAMAN - AP Health Writer

NEW YORK (AP) — Congress is increasing its scrutiny of the proposed merger of Medco Health Solutions Inc. and Express Scripts Inc., with one representative telling the Federal Trade Commission it should block the $29.1 billion deal.

In an Aug. 4 letter to the FTC, Alaska Rep. Don Young said the deal would reduce choice for the federal government's health programs and for other health plan sponsors. He said that while the combined Express Scripts might be able to negotiate lower drug prices, it would not necessarily pass those savings along to consumers.

Young, a Republican, also expressed concerns about regulation of the pharmacy benefits management industry and added that the deal could drive independent pharmacies out of business.

"I feel it would be prudent for the FTC to block the proposed merger of Express Scripts and Medco," Young wrote.

Pharmacy benefits managers run prescription drug plans, and they make their money by reducing costs for health plan sponsors and members.

Express Scripts announced in July it was buying Medco. The companies hope the deal will close in early 2012, assuming regulators and shareholders approve.

The sale has drawn attention from Congress because the combined company would be the largest U.S. pharmacy benefits manager by far. That would give it a lot of leverage in price negotiations with drugmakers and pharmacies, and groups that represent both local and chain drugstores have also spoken out against the deal.

The day the deal was announced, Pennsylvania Rep. Thomas Marino said it could hurt independent pharmacies, leading to greater health care costs and lower quality. In August, Michigan Rep. John Conyers asked the House of Representatives' Judiciary Committee to look into the sale. Both Marino, a Republican, and Conyers, a Democrat, are members of that committee.

Express Scripts said Wednesday that the acquisition of Medco will make the health care system more efficient and will save money for both plan sponsors and members. The St. Louis company added that the sale does not violate antitrust laws because competition in the pharmacy benefits management industry is intense, and while the enlarged Express Scripts Holding will be the biggest independent PBM, it will compete with pharmacy benefits businesses run by retail and specialty pharmacies, and health insurers.

Shares of Express Scripts fell 20 cents to $47.70 in Wednesday trading. Shares of Medco, which is based in Franklin Lakes, N.J., slipped 56 cents to $53.38.