Re The Express Scripts-Medco Merger — Calling Antitrust

Merrill Goozner

First posted 7/21/11 on Gooz News

If this merger doesn’t draw fire from the antitrust division of the U.S. Justice Department and the Federal Trade Commission, then those agencies aren’t paying attention. Express Scripts and Medco combined accounted for 1.7 billion prescriptions in 2010, worth about $110 billion in revenue. That’s about a third of the total prescription drug market.

The companies claim this merger will give them increased clout to negotiate better deals with drug companies. In theory, yes. But as we’ve seen many times in the past, prescription drug benefit managers spend more time squeezing pharmacies with their slim retail margins than they do calling questionable drug industry practices into question. They too often act as pass-through agents for drug company price increases, the same kind of cozy relationship that dominates every other nook of the health care field. They’ve played a somewhat constructive role in the high generic substitution rate in recent years, but as Matt Herper at Forbes points out this morning on the Forbes website, that behavior is now pretty much baked into drug plan and health plan behavior. That leaves PBMs without a function (except to add another layer of cost) unless they rigorously go after the drug companies on price and unnecessary use.

The only guarantee that PBMs will do that job is by the government insisting there be rigorous competition in the industry for drug and health plan business.

Merrill Goozner is an independent health care journalist, blogging at Gooz News.

Specialty Drugs Will Drive Future Rx Spending Trend

Jane Sarasohn-Kahn

First published 5/19/11 on Health Populi

In the 2011 Medco Drug Trend Report, there’s good news and bad news depending on the lens you wear as a health care stakeholder in the U.S. On the positive side of the ledger, for consumers, payers and health plan sponsors, drug trend in 2010 stayed fairly flat at 3.7% growth. That’s due in major part to the increasing roster of generic drugs taking the place of aging branded prescriptions products. More than $100 billion (with a ‘b’) worth of branded drugs will go off-patent between 2010 and 2020, and the generic dispensing rate could reach 85% by 2020, Medco expects, especially looking at high-cost categories like statins. So generics are dramatically slowing drug cost increases overall.

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