In a move that had largely been anticipated, the US Federal Trade Commission has asked Express Scripts and Medco Health Solutions for additional information in advance of their planned $29.1 billion merger. Late last week, the pharmacy benefit managers disclosed that the agency has made a so-called second request as part of its anti-trust review (read here).
The move had been expected, given that a combined entity would handle a dominant share of the PBM prescriptions in the US, as well as prescriptions for many specialty medications, which has drawn protests from various rivals (see this). By contrast, Express Scripts, which would actually acquire Medco, is portraying the deal as a smart way to lower the nation's health care bill (back story).
However, the deal would, essentially, lower the number of huge PBMs from three to two, which experts have indicated would likely prompt the FTC to conduct a more rigorous review of the deal. Just last week, for instance, the US Department of Justice filed a lawsuit to block AT&T planned $39 billion takeover of T-Mobile USA.
The additional FTC scrutiny - which means that Express Scripts may not be able to complete the Medco deal until sometime during the first half of 2012, assuming approval is granted - also follows criticism that the agency was too lax when the CVS pharmacy chain purchased Caremark, the other large PBM. There was no second request for information by the FTC during that review.
In 60 percent of the cases in which the FTC issues a second request, the agency has either blocked the merger or required a divestiture, according to David Balto, a former trial attorney in the Antitrust Division of the Justice Department and a former Policy Director in the FTC Bureau of Competition, who is now advising groups that oppose the Express Scripts and Medco deal.
UPDATE: An Express Scripts spokesman sends us this comment: "Express Scripts has been and continues to work collaboratively with the FTC staff. Although the timeline for the antitrust review process is not fixed, we are confident of a positive review and we anticipate the merger will close, as expected, in the first half of 2012. As the FTC has noted on several occasions, PBMs use their resources to effectively lower the cost of quality prescription drug care – that’s in the best interest of consumers."
merge pic thx to scazon on flickr