Express Scripts and Medco recently trotted out their staff pharmacists before Congress in full-page ads and in person as the face of their proposed mega-merger, essentially swapping out CEO suits for white coats. It turns out to be another case of the PBM rhetoric not matching the reality.
Several new ESI-Medco ads tout their pharmacist employees in conjunction with a “fly-in” which brought some of the PBMs’ pharmacists to Washington along with ESI’s chief medical officer, a physician. These are all likely honorable people following orders from the corporate brass. But the notion that the union of Express Scripts and Medco would produce anything close to a company “run” by pharmacists empowered to put patients’ health first is much closer to fairy tale than fact.
First, just a few weeks ago, one of the merger’s biggest cheerleaders, Medco CEO David Snow, offended virtually the entire pharmacy profession by reportedly touting robots over pharmacists and denying the contributions of community pharmacists to health care. As The Pharmacist Activist rightly notes, how outraged must some of these PBMs’ own pharmacists been! Especially as they themselves may face uncertain employment should this ill-conceived merger pass muster.
Second, when one looks at, for example, Medco’s staff makeup, it appears that it is comprised of approximately 90 percent NON-pharmacist employees. So, barely one in 10 of the PBM’s employees is a pharmacist. Not surprisingly, the merger partners’ respective CEOs are not among them. In comparison, more than 20 percent of community pharmacies’ employees are pharmacists. That’s according to a conservative reading of the NCPA Digest, the association’s annual industry snapshot. Express Scripts’ employee and pharmacist employee figures are not readily available online.
Third, beyond the meager number of PBM pharmacist employees, the composition of the senior staff and the allocation of staff compensation speaks volumes with respect to these companies’ priorities. Fifteen out of Medco’s 16 upper management employees are non-pharmacists. Express Scripts paid its CEO George Paz $51 million in 2010 alone. That made him the fifth highest-paid CEO in the country last year! This further suggests where the company’s priorities really are: feeding Wall Street’s voracious appetite and awarding rich executive compensation packages.
Mr. Paz’ compensation alone is nearly equal to that of 5,000 staff pharmacists combined. Put another way an employer sponsoring a plan covering two million lives (with pharmacy benefits administered by ESI) incurs $1.72 million in costs just for Mr. Paz’ compensation. Somehow, one doubts that is what he had in mind when he told Congress that eliminating “waste” was the number one way to reduce health care costs.
Pharmacists are among the most trusted professionals so this effort to highlight the PBMs’ pharmacists is understandable. But when one looks beyond the “spin” it certainly appears that here, too, ESI-Medco is trying to obscure the real competitive problems with this merger.