Some are still hoping to block the merger of Express Scripts Inc. (NASDAQ: ESRX) and Medco Health Solutions, Inc. (NYSE: MHS). It is just days away that the Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights will hold a hearing on the proposed merger.
A group called Preserve Community Pharmacy Access NOW!, or PCPAN, is opposing the deal. With its name, the group’s opposition to the merger can be of little surprise. The group has sent representatives to Washington, D.C. to oppose the deal. The end result is that two of the three largest pharmacy benefit managers will be combining. The group notes that this will give the consolidated mega-PBM “the unfettered ability to increase prices and reduce access to pharmacy services.”
PCPAN noted that there is “widespread concern from elected officials including attorneys general in dozens of states, pharmacy service providers, consumer advocates, patient advocates and others.”
What investors and the public can expect to continue to hear from the merging companies is that this will lower costs of healthcare. The merging companies have projected savings and synergies due to a combined workforce, fewer facilities, and more. This merger will of course means more job cuts in the nation.
Our question is a rather simple one, even if it is a two-part question. What have mergers really meant, and what ultimately happens to pricing when there is less competition? Juan Trippe of Pan Am once argued that there only needed to be one international air carrier to set prices in a fair manner for the consumer. Needless to say, that wasn’t the case.
The combined Express Scripts and Medco PBM at least will not be a monopoly. It still consolidates a sector. The verdict is still out on this merger.
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