Express Scripts and Medco Merge Mail Order, Specialty Pharmacies and, of Less Importance, PBM Operations


By Zachary French

George Paz was named Chairman and CEO of the new Express Scripts Holdings, Inc., the largest mail order pharmacy in the United States.  Listening in on the Express Scripts/Medco conference call with analysts to discuss the details of the merger, one would never know that Mr. Paz had moved Express Scripts from dead last among the Big 3 PBM-owned mail order pharmacies – with about a 20 percent market share – to top of the charts with a projected mail market share of 59 percent.  This is the current combined mail order market share of ESI and Medco.

Of course, the analysts asked a couple of questions about mail order market share concentration and how it would likely impact FTC approval of the merger. Mr. Paz was understandably reluctant to discuss the topic.  If the FTC isn’t concerned about the competitive and fair trade implications of a single company controlling nearly 60 percent of the mail order market share that would come as a big surprise to nearly everyone save Mr. Paz ,who confidently dismissed one analyst’s characterization of FTC approval as a “borderline” case.

Nor did Mr. Paz discuss the competitive and patient care impact of consolidating ESI and Medco’s specialty drug businesses.  The specialty drug market encompasses patients with serious chronic conditions such as hemophilia, cancer, HIV/AIDS, and Multiple sclerosis. It is a vital component of pharmacist care and the Big 3 PBMs have been forcing health plan beneficiaries into their so-called “central fill” (mail order) specialty pharmacies and out of community pharmacies, where these expensive drugs can be dispensed to patients along with in-store face-to-face pharmacist counseling.

The average specialty prescription is approximately $1,900. In 2009, Medco’s Accredo Health and Express Scripts’ CuraScript Pharmacy controlled 52 percent of the specialty drug market. This share will soon be controlled by a single company.

Express Scripts identified $1B in synergies for the proposed merger, prompting analysts to remark on how “modest” the number is in comparison to other ESI acquisitions.  Medco has recently lost several high-profile and lucrative clients including CALPERs, FEHP and apparently United Health Care. But, make no mistake; this merger is not about Medco’s diminishing PBM business.

This merger is about what Mr. Paz didn’t want to talk about on the conference call – domination of the mail order and specialty markets.  The ramifications of this merger will immediately begin to play out.  Before taking into account Medco’s recent losses, the combined companies control over 1.3B prescriptions annually.

Mr. Paz told analysts that he had called Walgreens’ CEO, Greg Wasson, to “give him a heads-up” on the deal after it was announced.  Walgreens reimbursement dispute with Express Scripts will likely be settled fairly quickly.  Clearly, when dealing with a corporate giant that controls the market share that the “new” ESI will control, there are few alternatives or leverage points for even a multi-billion national pharmacy chain.  Should the FTC approve this merger, community pharmacy small business owners and their patients will be squeezed between Express Scripts and CVS Caremark. Neither will be a traditional PBM – instead they will both be national pharmacy operations that will compete directly for prescriptions with community pharmacies while deciding what community pharmacies will be reimbursed.

As NCPA and others raise these issues, hopefully the FTC will agree that this hardly seems to fit the definition of competition.

9 Responses to “Express Scripts and Medco Merge Mail Order, Specialty Pharmacies and, of Less Importance, PBM Operations”


  1. 1 Jim Fields RPh CFO ApproRx July 22, 2011 at 2:32 pm

    Independent Pharmacy Must Add PBM Technologies to Their Marketing Tool Box

    Independents must not only learn how to use PBM technology in their existing business model; they must learn how to use it to preserve the independent pharmacy profession of the future. Pharmacists need to become clinical health care providers in addition to caretakers and distributers of Rx medications.

    Insurance health plans are desperately looking for and hiring networks of providers to do Wellness, Disease Management, Prevention, and Medication therapy management.

    Doctors of Pharmacy, who trained for 8 years for this job, are not being hired to fill this need. Instead these jobs and monies are going to nurses who have presented a business model for MTMs, Disease management, wellness, and prevention to PBMs and Health Insurance Plans.

    With the technology and BUSINESS structure that ApproRx and other alternative technology companies offer, pharmacists could be obtaining these jobs and monies. Why do we wait?

    Independent Pharmacist must see that the PBM business model is here to stay and we must offer OUR business model alternatives to the existing PBM model. Political solutions and complaints will only get us so far.

    Pharmacy is a business, not a PAC.
    Jim Fields RPh
    CFO ApproRx

    • 2 Tony September 24, 2011 at 5:48 pm

      Sounds good if your offer alternative business model or solution. What are they?

  2. 3 Ellie August 4, 2011 at 1:29 am

    I sincerely hope the merger is not approved by the FTC. Express Scripts is a horror–I have had nothing but bad experiences with them, from prescriptions that have not been filled on time to ones they claim were sent but which I never received. Medco, on the other hand, is a fine company that is patient oriented, and with which I have never had a problem.

  3. 4 Susan August 15, 2011 at 6:39 pm

    Express Scripts and the specialty pharmacy Cura Scripts are the worst mail order pharmacies ever. It’s always a hassle and they don’t even ship your prescriptions our on a timely basis.. Used to have CareMark, they were great. One day the poor decisions and lousy service they provide is going to catch up with them. Sooner than later… I have written them letters and get canned responses and the problems never are corrected. INCOMPETENT!

  4. 5 erni October 25, 2011 at 4:43 am

    i like that…
    it’s will be better

    libsi.com

  5. 6 haha November 28, 2011 at 10:48 pm

    today deal is worth only about 8 dollars more per share of medco. hardly a premioum offer

  6. 7 hubert clawson January 15, 2012 at 1:14 pm

    I was on the phone for over and hour .None of your people could give me any help .I had sent in a lot of prescriptions that had been filled by the VA .I wanted to be reimbursed for the copay . I received your response asking for my ID # which is 927928600-00 and group# 68182 .your claim #12006me31453.The group # is on the forms you sent me back so why you asking for these #’s when you already had it? please call me at 352-378-4375 or e-mail me .When can I expect to receive payment ?

  7. 8 Pam December 5, 2012 at 6:44 pm

    DO NOT EVER use EXPRESS SCRIPT MAIL ORDER PROGRAM. I am forced at work to use Mail Order Pharmacy for any over 30-day supply prescription. It takes EXPRESS SCRIPT more than 2-1/2 weeks to fill a name brand cough syrup with codeine (what they identify as control substance due to codeine in it). EXPRESS SCRIPT require doctor office to CALL VERBALLY to verify prescription order even when prescription is sent directly from Palo Alto Medical Foundation doctor’s office PC. Once the 2-1/2 weeks pass & medication got finally ship out, the packaging is SO INSUFFICIENT and flimpsy that half of GLASS BOTTLES containing medication shattered when arrived at patient’s home. To save their shipping expense, EXPRESS SCRIPT mail your prescription only to US Postal Service (main post office in your area). Then US Post Office deliver your medication to you (free like your daily mail) — takes even extra step & time. Almost 4 weeks after I went to see my doctor, I still had not received my doctor’s FULL prescription of cough syrup. When you call in to complain, those customer service rep will only authorize 5 day supply to tie you over. IT IS a NIGHTMARE. I never wish this experience on anyone else especially when you are sick & in need of thos medication to get well.


  1. 1 Speciality scripts | Imagetree Trackback on April 2, 2012 at 10:22 pm

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