By Rebecca Adams, CQ HealthBeat Associate Editor
A federal judge has denied the request of a group of community pharmacists to immediately stop the acquisition of Medco Health Solutions by Express Scripts, Inc. The judge will next decide whether to throw out the lawsuit.
The pharmaceutical benefits management companies Express Scripts and Medco merged on April 2, after the Federal Trade Commission announced it would not block the deal. The companies had announced their plans in July 2011.
Community pharmacists — represented by the National Association of Chain Drug Stores, the National Community Pharmacists Association and nine community pharmacies — filed suit in March against the $29 billion deal in U.S. District Court for the Western District of Pennsylvania. The groups said that neighborhood pharmacies and consumers would be at a disadvantage if the two companies were allowed to join forces, which could lead to reduced competition. They asked the court to block the deal while the lawsuit is pending.
On Wednesday, Federal District Court Judge Cathy Bissoon said that the pharmacists “have not met their burden to establish the likelihood of immediate, irreparable harm” that would require the court to issue a preliminary injunction. Furthermore, she wrote that “the fears expressed by plaintiffs already have been realized.” The two companies have already shared proprietary information with each other and most of Medco’s senior staff have left. If she granted the pharmacists’ request to keep the two companies separate, the result for Medco even back in early April would have been “a headless organization that would likely be unable to survive on its own, much less compete against” Express Scripts.
The company has asked that the pharmacists’ case be dismissed, a motion that Bissoon is currently considering.
The pharmacists said in a joint statement on Thursday that “we presented a compelling argument for the court to suspend the combination of Express Scripts and Medco until the merits of our complaint could be considered in full. It is important to note that the judge has not yet ruled on the merits of the case or the motion to dismiss, so the case is continuing.”
PBMs act as middlemen who negotiate with drugmakers for the lowest possible prices on behalf of insurance plans, passing those savings on to the plans and others. The drug benefit managers also run their own mail-order and specialty pharmacies. This deal creates the biggest PBM in the country.
The community pharmacy companies are backed by consumer groups such as the Consumer Federation of America, National Consumers League, National Legislative Association on Prescription Drug Prices and the Public Interest Research Group. The consumer advocates wrote in a brief to the court that they are “concerned with the abusive, anti-consumer conduct” of the PBMs.
The FTC investigated the deal for eight months before the panel decided that it would not take action to block it. The retail pharmacists hope that their lawsuit against the combined company will give them one more chance to thwart the deal.