* Kohl says critics fear testifying
* Critics say deal will lead to higher prices, worse care
* Medco say big box hurting small pharmacies, not PBMs
By Diane Bartz
WASHINGTON, Dec 6 Major firms which oppose a
proposed deal to merge Medco Health Solutions Inc and
Express Scripts Inc feared retaliation and declined to
publicly discuss the deal, said Senator Herb Kohl, head of the
Senate Judiciary Committee's antitrust panel.
Senator Richard Blumenthal also took aim at the estimated
$26 billion deal, saying it was "problematic" and asking the
companies if they would be willing to accept major divestments
to win approval for the deal.
The proposed transaction, which was announced in July,
would combine two of the three U.S. pharmacy benefit managers
(PBMs) that are large enough to manage prescription drug
benefits for nationwide companies.
Kohl said that, post-merger, Express Scripts and Medco
would have 60 percent of the U.S. mail order prescription drug
business and 50 percent of the specialty drug market.
"It is notable that no large employer who privately
expressed concerns to us wished to testify at today's hearing,
often telling our staff that they feared retaliation from the
large PBMs with whom they must do business," Kohl said.
The chief executives of the two companies, for their part,
argued that they were working to push prescription drug prices
down while protecting customers by guarding against negative
"We are going to lower prescription drug costs that are far
too high," Express Scripts CEO George Paz said in testimony
prepared for the Senate Judiciary Committee's antitrust panel.
Medco CEO David Snow agreed, saying, "We drive drug costs
down for our clients and patients in service to our more than
65 million members across America."
But Blumenthal also questioned whether the deal could get
approved by the Federal Trade Commission, saying the companies
would be by far the largest PBM if the merger goes through.
"Under the law, it is problematic," he said. "I'm
interested in knowing what you will do to make this merger more
WHO'S KILLING COMMUNITY PHARMACIES?
Senators Al Franken and Amy Klobuchar, both of Minnesota,
asked about the PBMs' relationship with community pharmacies.
Community pharmacies, under huge pressure from big box
stores which offer low prices, have complained that they
compete against the PBMs. However, the community drugstores
also service PBM customers at rates set by the PBMs.
"PBMs directly set the reimbursement rates for community
pharmacies and for us, it's take it or leave it," said Susan
Sutter, who owns three Wisconsin pharmacies.
The FTC is assessing the merger to make sure it complies
with antitrust law. A group of about two dozen state attorneys
general are also looking at it, and could conceivably challenge
the deal on their own.
An antitrust subcommittee at the House of Representatives
has also held hearings to discuss the deal, although lawmakers
have no formal power to stop any transaction.