Federal regulators approve pharmacy benefit manager merger despite congressional objections

Federal antitrust regulators on Monday approved a $29 billion merger creating the nation's largest manager of prescription drug benefits despite widespread congressional objections.

Express Scripts and Medco Health Solutions announced the completion of their merger immediately after the Federal Trade Commission gave its approval. More than 80 members of Congress, lobbied by pharmacies in their districts, have weighed in against the merger and raised concerns that it could lead to fewer choices for consumers.

"Our merger is exactly what the country needs now," George Paz, chairman and CEO of Express Scripts, said in a statement. "It represents the next chapter of our mission to lower costs, drive out waste in healthcare and improve patient health. We remain focused on formulary management, channel management and closing gaps in care, which will allow us to further improve the health of people with chronic and complex medical conditions."

The FTC voted 3-1 to allow the merger to go forward following an eight-month review that "revealed a competitive market for PBM services characterized by numerous, vigorous competitors who are expanding and winning business from traditional market leaders."

"The acquisition of Medco by Express Scripts will likely not change these dynamics: The merging parties are not particularly close competitors, the market today is not conducive to coordinated interaction, and there is little risk of the merged company exercising monopsony power," the commission said in a statement. "Under these circumstances, we lack a reason to believe that a violation of Section 7 of the Clayton Act has occurred or is likely to occur by means of Express Scripts' acquisition of Medco."

In her dissenting statement, Commissioner Julie Brill called the merger an industry "game changer" that creates a "merger to duopoly" between the new entity and CVS Caremark, "with few efficiencies and high entry barriers — something no court has ever approved."

Anticipating a prompt FTC decision, drug retailers last week filed suit and asked a federal court for a temporary restraining order blocking the merger until the court can issue a ruling.

After closing on the Medco acquisition, both Express Scripts Inc. and Medco Health Solutions Inc. are wholly owned subsidiaries of Express Scripts Holding Co.

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