Consumer groups urge rejection of drug benefit manager merger

Five consumer groups are urging federal regulators to reject a proposed merger between two of the nation's largest administrators of prescription drug programs.

The proposed merger between two giant Pharmacy Benefit Managers (PBMs), MedCo Health Solutions and Express Scripts, is under review by the Federal Trade Commission. The groups wrote in a letter to Commissioner Jon Leibowitz that the merger would:

• Reduce competition and increase costs for consumers; 

• Enable the PBMs to create restrictive pharmacy networks that limit patient choice;

• Give the PBMs "tremendous dominance" - more than 50 percent of the market - with regards to costly specialty drugs such as those that fight cancer; and 

• Limit access to new and innovative drugs by increasing the PBMs' ability to create restrictive formularies.

Specialty drugs have drawn much of the scrutiny. Some 57 million Americans depend on them, and prices rose 19.6 percent in 2010 versus 1.4 percent for traditional retail drugs, a trend that's expected to worsen.

The merger would give the new PBM "the unique power to increase the cost of specialty pharmaceuticals at will," the letter states.

"It is important to point out that the specialty pharmacy market is a relatively new and still developing area, and no single business model has proven to be most efficient. The innovation necessary to help this market to evolve in the most cost-effective manner would be greatly crippled by the merger."

Proponents of the merger say both consumers and taxpayers stand to gain as pharmacy benefit managers force pharmacies and other drug distributors to become more efficient.

The letter is signed by Consumers Union, the Consumer Federation of America, the National Consumers League, U.S. PIRG and the National Legislative Association on Prescription Drug Prices. The latter is a nonprofit organization of state legislators devoted to keeping drug prices low for state healthcare programs. 

The letter was sent ahead of Tuesday afternoon's hearing on the merger by a House antitrust panel. Lawmakers cannot block the merger, but regulators may take their concerns into account.

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