By John Norton
The opposition to the proposed Express Scripts-Medco merger of pharmacy benefit managers (PBMs) continues to intensify as we ring in the New Year.
U.S. Representative Ralph Hall (R-Texas) sent a sternly and eloquently worded letter to the Federal Trade Commission (FTC ) about the importance of maintaining a business landscape amenable to real competition with limited interference from middlemen, who he deems as having limited value. As a result he thinks allowing one PBM to handle 41% of all prescriptions would be problematic. Hall opposes the merger and believes an FTC approval would make our struggling health care delivery system worse. He asserts that if the FTC, “has any role in deciding the type of care patients receive, it is to create and ensure a vibrant private marketplace for insurance.” Hall further explains the merged company, “would dominate the market and enable them to squeeze the health care system at the expense of patient choice, access and service.” He concludes by stating an FTC approval, “would threaten jobs, increase costs, and diminish patient health – the last thing our economy needs at this time.”
Steve Pociask, president of the American Consumer Institute, writing on The Hill.com, uses an unusual, but compelling analogy to argue against the merger. He details how in response to the soil erosion for the dustbowls during the Great Depression millions of acres of Kudzu vines were planted. But their propensity for rapid growth wreaked expensive damage to forests in the South to this day. Pociask says that PBMs that “ were originally hired to help manage prescription plans are now extracting so much profit and distorting the markets so thoroughly that they have become the kudzu of the healthcare industry.” This occurs because there is no transparency. He details the PBMs’ business model that is based on conflicts of interests and spread pricing that have caused these companies grow to exponentially, “but rather than these profits encouraging increased market entry and competition, the industry is consolidating, as evidenced by the announced merger of the two largest and most profitable PBMs – Express Scripts and Medco,” Pociask recommends that, “oversight needs to review the industry’s market power, self-dealing, conflicts of interest and lack of transparency – all of which will be exacerbated if the FTC does not block the planned merger.”
These additional, authoritative voices are welcome additions to the growing list of those questioning this anticompetitive merger. NCPA and its members continue to oppose the merger, which we fear will reduce competition, restrict patient access, quality and choice and ultimately increase prescription drug prices.