Merger Watchdogs Asleep in Medco-Express PBM Merger? (MHS, ESRX)

Isn’t the current administration’s watch-dog policy supposed to police mergers and acquisitions in regards to competition and pricing power?  Many industry watch groups have been opposed to the merger where Medco Health Solutions, Inc. (NYSE: MHS) is being acquired by Express Scripts Inc. (NASDAQ: ESRX).

The Federal Trade Commission voted 3 to 1 to approve the deal saying its own probe showed that the prescription benefit manager market has numerous vigorous competitors which are expanding and taking away business from traditional market leaders.  The stance of the FTC is that the competitive landscape will not change and that a combined Express/Medco will not represent a monopolistic pricing power situation.

What is interesting here is that the merger has been pending for months and months for an extended review.  Both companies have a pre-merger valuation of nearly $30 billion each.

It is interesting that Express Scripts’ CEO noted that this is a good deal for the country that will lower consumer costs, improve patient health, and drive out waste in healthcare costs.  Let’s just say that we are not alone in being at least a bit skeptical on these ‘benefits’ being discussed as far as whether or not that will ultimately save the consumer.  We have received multiple emails from multiple groups calling for this merger to be blocked as anti-competitive.

Express Scripts is up 4.7% at $56.71 and Medco Health Solutions is up 2% at $71.71.

JON C. OGG