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In 2011, Express Scripts, Inc. announced plans to acquire Medco Health Solutions for $29 billion. The acquisition was a transaction between two of the three largest US pharmacy benefit managers (PBMs). As third-party administrators of prescription drug programs, PBMs are mainly responsible for contracting with drug makers to provide prescriptions to health plans and employer groups, providing prescription distribution services, and then processing and paying drug claims on behalf of the employers they sign up. After the acquisition was announced, the US Federal Trade Commission (FTC) opened an investigation to determine whether the acquisition would substantially reduce competition in violation of Section 7 of the Clayton Act.

As described in a statement that was issued by the FTC, the agency was concerned that the transaction might reduce the number of competitors from three to two in the market for the provision of PBM services to large private employers and other plan sponsors. The FTC also noted that the transaction could have been viewed to be presumptively anticompetitive for at least two reasons—the PBM industry is concentrated and the market share of the merged entity was more than 40% in even the broadest market definition. The FTC also was concerned that the transaction could give the combined firm greater bargaining power over retail pharmacies and to demand more exclusive distribution arrangements from manufacturers of specialty drugs.

NERA was retained on behalf of Medco to assist the company and its counsel in assessing the potential competitive effects of the proposed acquisition. NERA Senior Vice Presidents Dr. Lawrence Wu and Dr. Thomas McCarthy, along with Senior Consultant Dr. John Scalf, focused their attention on analyzing Medco's historical sales and competitive bidding data. Analyses of these and other market data were particularly informative about the likely competitive effects of the transaction. As noted by the FTC, the bidding data produced by Medco, Express Scripts, and other third parties demonstrated that Medco and Express Scripts were not particularly close competitors and that other competitors have been successful in winning business away from the merging parties. These and other analyses were central to the FTC's conclusion that the market for PBM services was competitive and that the transaction would not have an adverse effect on the competitive dynamics.

On 2 April 2012, the FTC announced that it had approved the acquisition. After an eight-month investigation, the Commission concluded that the transaction was unlikely to substantially lessen competition in the PBM industry. In its statement, the FTC said that its investigation revealed that Medco’s and Express Scripts' high combined market shares did not accurately reflect the current competitive environment and were therefore an inaccurate indicator of the likely effects of the transaction on competition and consumers. The Commission said that the acquisition was unlikely to “cause unilateral anticompetitive effects, enhance the likelihood of successful coordination, or facilitate the exercise of monopsony power in any relevant market in which the merging parties participate.”

On 25 April, US District Court Judge Cathy Bissoon denied a motion by the National Association of Chain Drug Stores and other pharmacy groups and retail pharmacies to block the acquisition.