THE BLOG
01/29/2012 11:25 am ET | Updated Mar 30, 2012

PBM Merger Means More Bad News For Consumers

American consumers, still worried about finding or keeping their jobs and paying their bills in today's troubled economy, could receive another blow if a major health-industry merger is approved.

Early this year, the Federal Trade Commission (FTC) will decide whether or not to allow pharmacy benefit managers (PBMs) Express Scripts, Inc. (ESI) and Medco Health Solutions to merge. For the sake of American patients -- particularly those in lower-income and minority communities -- I sincerely hope the deal is stopped.

Undoubtedly, most Americans today are feeling the effects of our troubled economy in some way or another. This is especially true for the underserved communities that were struggling just to keep up even when our economy was doing well. Education, housing, healthcare and jobs are just a few of the areas where underserved Americans have historically lagged behind. Our economic downturn has only exacerbated these disparities.

For instance, while the overall U.S. unemployment rate dropped for the fourth straight month in December, black unemployment rose again from 15.5 to 15.8 percent overall and from 39.6 to 42.1 among African American teens. Similarly, communities that are traditionally less likely to own their own home are even more likely to have lost their homes as a result of the recession. And finally, nearly 50 million Americans are currently without health insurance - this number includes a disproportionate number of lower-income and minority Americans.

If we are going to get back to full strength, we need to get things moving in a more positive direction. To start, we need to avoid making things worse for those that have been hit the hardest by taking away access to local community pharmacies and increasing prescription prices. And this is what could result from an approved merger between ESI and Medco, two of the nation's largest PBM companies.

PBMs broker prescription drug contracts for employers, unions, health plans and others. They do so largely without regulation and with a lop-sided advantage in negotiations that increases costs to insurers and reduces the reimbursements paid to pharmacies. They squeeze the delivery system at both ends, pushing profits toward the middle. These are multi-billion-dollar companies, which, combined, would control an excessive share of the market - approximately 50 percent - and would be almost twice as big as their nearest competitor.

In recent years, PBMs have used their clout to reduce reimbursement rates to pharmacies for filling prescriptions to levels that are, in some cases, unsustainably low. They have a financial interest in doing so, both because it increases their own profit, and because community pharmacies compete with the mail-order pharmacies run by the PBMs themselves.

An approved merger will give the consolidated-PBM increased power to continue to wield a lopsided advantage in setting contract and reimbursement terms for community pharmacies. Already, Express Scripts has taken an aggressive stance against one of the country's leading community chain pharmacies that is reducing patient choice. If Express Scripts is allowed to merge with Medco, it is very possible that the consolidated PBM will not only continue this bullying behavior, but will use its size and dominance to cause further harm to patients, community-based pharmacies and healthcare outcomes. Many smaller pharmacies would be forced to close their doors due to the increased costs and severely slashed reimbursements that would result.

Pharmacists are front-line health providers, offering many health services in addition to filling prescriptions. If community pharmacies close, neighborhood residents will no longer have convenient access to medications, vaccinations, health screenings and prescription counseling. Restricting access to these services hurts everyone, but low-income and minority communities that already struggle with health-care affordability and accessibility issues, and have lost significant ground economically since the start of the recession, will be hardest hit.

Small and independent pharmacies may not fit into the PBM industry's vision for the future. But community pharmacies and pharmacists are the most affordable and accessible health care provider in many communities -- and underserved communities in particular. Certainly their loss will have an adverse affect on patient care and outcomes.

The potential harm posed by this merger is nationwide - and therefore, the deal should be closely scrutinized and stopped. American patients and consumers can ill-afford the costs (financial and otherwise) that an approved merger would generate.

Eva Clayton, a former member of Congress from North Carolina, is chair of the Preserve Community Pharmacy Access NOW! (PCPAN) coalition.