FMI Urges FTC to Closely Watch Planned PBM Merger

The Food Marketing Institute (FMI) urged the Federal Trade Commission (FTC) to carefully evaluate the proposed consolidation of prescription benefits management companies Express Scripts (ESI) and Medco Health Solutions (Medco), and wrote in a letter to FTC Chairman Jonathan Leibowitz that such a merger would reduce competition resulting in a decrease of pharmacy patient care and an increase in health care costs to both consumers and to FMI members as employers.

According to FMI, if FTC approves the merger, 80 percent of the national prescription drug care market for large employers would be dominated by two prescription benefits managers (PBMs). The FMI argument is twofold:

  1. Harm to pharmacy operations in retail supermarkets: FMI believes the merger between ESI and Medco would reduce competition resulting in decreased patient care and increased health care costs. Highly restrictive pharmacy networks are likely to increase post-merger which will reduce patient choice, disrupt patient care, and diminish competition in drug distribution.
  2. Harm to FMI members as purchasers of PBM services: FMI members as employers provide pharmacy benefits for their employees and must purchase PBM services. With the absence of Medco in the bidding process, there would be a significant loss of competitive pressure on ESI and CVS Caremark to lower prices.

The letter appeals to the Commission to ensure competition in the marketplace is preserved: “FMI members are concerned about this acquisition because of the impact on their customers and employers,” said FMI. “Customers appreciate the convenience of one-stop-shopping for both groceries and prescription drugs. And pharmacies in retail supermarkets have the unique ability to assist consumers with nutritional recommendations to accompany medication regimens.”

FMI conducts programs in public affairs, food safety, research, education and industry relations on behalf of its 1,500 member companies — food retailers and wholesalers — in the United States and around the world. FMI’s U.S. members operate approximately 26,000 retail food stores and 14,000 pharmacies.

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