Super PBM merger approved; NACDS, NCPA file emergency motion to block merger
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."
Genentech announces results of cancer drug trial
SOUTH SAN FRANCISCO, Calif. — Breast cancer patients taking an experimental drug made by Roche subsidiary Genentech lived significantly longer than those taking another drug made by GlaxoSmithKline, according to results of a late-stage clinical trial.
Genentech announced Friday the results of the phase-3 "EMILIA" trial of trastuzumab emtansine in patients with an aggressive form of the disease that had spread to other parts of the body. The study enrolled 991 patients with HER2-positive breast cancer that had spread to other parts of the body who had previously taken the drug Herceptin (trastuzumab) and the chemotherapy drug taxane.
The patients were compared with those who received GSK’s Tykerb (lapatanib) and Genentech’s chemotherapy drug Xeloda (capacitabine).
The company also is conducting two other phase-3 trials dubbed "MARIANNE" and "TH3RESA."
Express Scripts struck a match to the merger debate after suggesting approval imminent
WHAT IT MEANS AND WHY IT’S IMPORTANT — When Express Scripts filed with the Securities & Exchange Commission that its merger with Medco could close as early as the week of April 2, that seemed to set off a firestorm of activity. Reports were published suggesting the Federal Trade Commission decision was imminent, and what’s more that the agency would decide in favor of the merger. Speculative day traders Wednesday morning pushed the opening stock prices across both Express Scripts and Medco higher by 3.9% and 5%, respectively. The anti-merger coalition Preserve Community Pharmacy Access NOW! hosted a press conference asking state attorneys general to do what the FTC might not — block the merger in the courts. And two trade associations representing the entirety of retail pharmacy did exactly that — filed suit in Pittsburgh to block the merger.
(THE NEWS: NACDS, NCPA, nine retail pharmacy companies sue to block ESI-Medco merger. For the full story, click here.)
Still, 40% of DSN online readers don’t think the FTC decision will come next week; they think that the FTC decision will extend beyond the 30-day period. (To vote yourself, click here.) Incidentally, share prices across both Express Scripts and Medco also have dropped slightly from their Wednesday open high, but the stocks still were trading at a 1.2% and 1.4% respective premium to Tuesday’s close as of Friday afternoon. The 60% remainder of DSN readers who think the FTC decision will come sooner than later are split pretty evenly as to which direction the FTC will decide the week of April 2 — with only a handful more votes on the side of an approved merger.
What was perhaps overlooked in all of this was the fact that the FTC did testify Wednesday morning that there certainly was an anticompetitive element in the relationship between pharmacy benefit managers and independent pharmacy. Before a House committee hearing arguments regarding the Preserving Our Hometown Independent Pharmacies Act of 2011, the FTC testified that waiving antitrust requirements for independents would result in higher drug prices because, get this, the community pharmacies would be better able to negotiate more favorable reimbursement terms. What the FTC did not testify was that in place of that better negotiating position the status quo for those pharmacies is to be force-fed a take-it-or-leave-it proposition on what will amount to — if the merger is approved — almost as much as two-thirds of the independents’ prescription business.
Beyond trending stock prices and the line on the will-it/won’t-it/when-will-it-happen DSN poll, here are the numbers that should stick with you as this story continues to play out the week of April 2. The Express Scripts-Medco books, combined, represent more than half (as high as 60%) of the prescription business of some of the plaintiffs in the suit filed Thursday. Across the nation both Express Scripts and Medco represent 155 million lives, or 49.5% of every man, woman and child in the United States as of Friday afternoon. As many as 78 Congress leaders have written the FTC to say, "Wow, this really isn’t such a good idea, this merger." And as many as 30 state attorneys general are investigating the question, "We hear this is bad, but how bad can it be for my state?"