WASHINGTON — The controversial merger between Express Scripts and Medco was completed Monday morning, according to a press release issued by both Express Scripts and the Federal Trade Commission. However, the merger already is being challenged — the National Association of Chain Drug Stores, the National Community Pharmacists Association and nine retail pharmacies filed a complaint against the proposed merger last week, and on Friday filed an emergency motion to temporarily restrain the consummation of the merger until the outcome of the NACDS/NCPA suit has been determined.
Express Scripts and Medco were issued summonses regarding the NACDS/NCPA case on Monday morning, according to court documents. As many as five state attorneys general have pledged to file similar lawsuits challenging the proposed merger should the FTC not do so, according to several reports.
There also is dissension among the commissioners of the FTC. The FTC's vote on the motion to close the investigation was 3-1, with commissioner Julie Brill dissenting and issuing a separate statement. Commissioners Thomas Rosch and Edith Ramirez and chairman Jon Leibowitz issued a closing statement on behalf of the commission. The vote on the motion to issue the Statement of the Commission was 3-0-1, with commissioner Brill abstaining.
In its statement, the FTC majority explained that the commission's investigation "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. 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."
"This $29 billion merger — between two of the largest three pharmacy benefit management providers — is a game changer," countered Brill in a separate statement. "I have reason to believe that this merger is, in fact, a merger to duopoly with few efficiencies in a market with high entry barriers — something no court has ever approved. I therefore respectfully submit that the commission should have filed a complaint in federal district court seeking to enjoin the transaction pending a full trial on the merits here at the commission. ... Under any definition of the market, this merger will create a highly concentrated market that should be presumed to be likely to enhance market power."