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After an intense eight-month investigation by the US Federal Trade Commission (FTC), both chambers of Congress, and 32 state attorneys general, Express Scripts, Inc. closed its $29 billion acquisition of fellow pharmacy benefit manager (PBM) Medco Health Solutions, Inc. without any conditions on 2 April 2012. The transaction created the largest PBM in the nation despite unprecedented levels of public opposition. A NERA team including Senior Vice Presidents Dr. Lawrence Wu and Dr. Thomas McCarthy and Senior Consultant Dr. John Scalf performed economic analyses relating to the transaction on behalf of Medco, while law firm Dechert LLP provided antitrust counseling. The most highly publicized and politically charged issue during the merger investigation was whether the merger would give the combined firm monopsony power over retail pharmacies. In this article from the Antitrust Healthcare Chronicle, Dr. Scalf and Dechert LLP Associate Rani Habash provide an inside look at the case, summarizing and analyzing the monopsony issues raised during the investigation. The authors conclude that the FTC correctly determined that the facts did not support the retail pharmacy groups’ monopsony theory, and that any reduction in reimbursement rates was likely to result in cost savings to be passed through to PBM customers, therefore benefiting consumers through lower healthcare costs.

Learn more about NERA’s Role in the Approval of Medco’s Acquisition by Express Scripts.